Bharti Airtel And Reliance Jio Marked Their First Spectrum Trading Agreement Worth INR 1,497 Crores

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Reliance Jio has entered into a definitive agreement with Bharti Airtel for the acquisition of the right to use spectrum in the 800MHz band in three circles through spectrum trading — marking the first such deal between the two telecom giants. The transferred spectrum comprises those in Andhra Pradesh (3.75 MHz), Delhi (1.25 MHz), and Mumbai (2.50 MHz).

With this trading of the right to use spectrum, Reliance Jio will have 2X15MHz of spectrum in the 800MHz band in Mumbai circle and 2X10MHz of spectrum in the 800MHz band in Andhra Pradesh and Delhi circles. The aggregate value for the right to use this spectrum is Rs 1,497 crore. The trading agreement, it said, is in accordance with the spectrum trading guidelines issued by the Department of Telecommunications and is subject to requisite regulatory and statutory approvals.

Through this agreement, Airtel will receive a consideration of Rs 1,037.6 crores from Jio for the proposed transfer. In addition, Jio will assume future liabilities of Rs 459 crores related to the spectrum. “The sale of the 800 MHz blocks in these three circles has enabled us to unlock value from the spectrum that was utilized. This is aligned to our overall network strategy,” said Gopal Vittal, MD & CEO (India and South Asia), Bharti Airtel.

The 800MHz spectrum, which was initially used for the rollout of wireline services, has been considered by telecom operators for 4G LTE networks across India. However, operators including Airtel and Vi in recent times had shifted their focus towards newer bands.

Airwaves come in different bands which support different propagation characteristics for the transmission of voice and data. For instance, lower bands like 800 MHz and 900 MHz support good indoor coverage while higher bands like 2300 MHz have a good carrying capacity. The airwaves are also sold in quantities measured as MHz.

Notwithstanding the deal, Jio and Airtel have often been at loggerheads with each other right since Mukesh Ambani entered the telecom business in September 2016. Airtel, founded by Sunil Mittal, had accused Jio of engaging in predatory prices to capture the telecom market, while also alleging that the new entrant had disrupted the financial model of the telecom industry by making voice-calling free.

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