RCom to trade spectrum with RJio to offer 4G

With be sharing and trading spectrum with brother's entity, confirms Anil Ambani; separation of tower unit by Dec

Reliance Communications (RCom) will partner with Mukesh Ambani’s Reliance Industries' telecom venture, Reliance Jio, for offering fourth-generation (4G) services through a spectrum sharing and trading route.

Jio, expected to launch its 4G service by the end of this year, will be able to access RCom’s 2G and 3G network through the partnership. RCom is in an advanced stage of talks with Jio for sharing and trading its 800-850 MHz band spectrum, which will enable it to utilise Jio’s 4G network. There will be a reciprocal agreement for roaming, for the benefit of customers in both the networks.

“These arrangements will facilitate RCom customers’ access to Reliance Jio’s world class 4G/LTE networks on an asset-light and minimal capex model...(and) Reliance Jio customers have a fallback on to RCom’s extensive 2G and 3G networks,” Anil Ambani, chairman of Reliance Group, said at RCom's annual general meeting on Wednesday. Ambani also said he was "grateful" to his elder brother for "unstinted support and guidance".

Over recent years, both companies have entered into partnerships to share mobile towers and the optic fibre network. This happened after a long period of cut-throat rivalry, following a much-publicised split in 2005 of the erstwhile Reliance empire founded by their father, the late Dhirubhai Ambani. Bharti has launched 4G mobile services. Others, including Vodafone and Idea Cellular, have announced plans to soon launch these.

The 4G services for RCom subscribers will be launched by the end of this financial year. it says it sees the strategic partnership with Reliance Jio going to the ‘next level of cooperation’.

Jio has 2,300 MHz of Long-Term Evolution (LTE) spectrum in all circles, which allows it to launch high speed 4G data services. It needs support of lower frequency bands such as 800 MHz in CDMA technology for seamless voice call operations, since high frequency spectrum are good only for fast internet connectivity. RCom is the only operator in the country to have the 800-850 MHz band in all the 22 telecom circles.

Jio has a spectrum sharing pact with RCom for 800 MHz bands in 10 circles. It in the process of signing a pact to use its spectrum in other circles, after the Union government earlier this month relaxed the norms on sharing and trading of spectrum between operators.

RCom is also in advanced discussion with Sistema Shyam Teleservices (SSTL) for acquiring the latter's operations through a stock swap. RCom is eyeing the 850 MHz spectrum owned by SSTL, which operates with the brand name of MTS, as some its 800 MHz spectrum licences are to expire in 2021.

“The proposed merger is highly value-accretive for RCom, as it will in eight important circles extend the validity of the 850 MHz spectrum by a significantly long period of 12 years, all the way up to 2033,” said Anil Ambani.

License validity extension gives RCom an edge in a spectrum sharing deal — earlier, it was expected that the limited validity of its licenses would not fetch a proper valuation for its radiowaves if intended to trade these.

“RCom expects to sign and announce the tower unit transaction within the next month or two. This will result into a substantial reduction of RCoM’s overall debt,” said Ambani.

RCom stocks were up by 6.26 per cent and closed at Rs 67.90 on BSE. The market valuation went up by Rs 996.2 crore to Rs 16,900.2 crore, according to an agency report.