Reliance Jio to partner with Reliance Communications

KOLKATA: With the Narendra Modi government allowing spectrum sharing, Reliance Communications (RCOM) and Reliance Jio Infocomm are set to ink a pact that will enable the Mukesh Ambani-owned telco to offer fourth generation (4G) services over the 800 MHz band across 10 circles.

The airwaves sharing pact will allow Reliance Jio to access 10 MHz of contiguous 4G bandwidth in Mumbai, UP-East, Orissa, Madhya Pradesh, Bihar, Assam, Northeast, Haryana, Himachal Pradesh and Jammu & Kashmir, a person familiar with the matter told ET.

India's fourth largest mobile carrier, Reliance Communications (RCOM), too will benefit as it will gain access to Jio's 4G network in the 10 circles at virtually zero incremental capex costs, another person said. RCOM and Reliance Jio declined to reply to ET's queries on the upcoming spectrum sharing pact.

In the run up to inking the spectrum sharing pact with Jio, Anil Ambaniowned RCOM has applied to the telecom department (DoT) for permission to progressively liberalise its old 800 MHz spectrum holdings in all the 10 circles that were originally assigned without auctions at government-set prices, the first person said. Liberalise, in this context, means paying market-linked price to the government for spectrum which wasn't auctioned.

RCOM's spectrum liberalisation cost is pegged in the Rs 1,500-to-1,800 crore range. If RCOM were to liberalise all its earlier spectrum holdings at once, it could have cost about Rs 7,500 crore. But as all the airwaves don't need to be liberalised and even the portion that is required will be liberalised only for the balance duration of the permit, the outgo will be less.

Conversion of non-contiguous airwaves in the 800 MHz band into contiguous or 'continuous' frequencies is critical for Reliance Jio for delivering top-grade 4G LTE services on this frequency, which has been historically used for CDMA services.

Reliance Jio had acquired 49 units in the 800 MHz band across the 10 circles at a cost of Rs 7,876.42 crore in India's biggest spectrum sale in March. But of the 10 circles, Jio has continuous 800 MHz airwaves in only four — Mumbai, Madhya Pradesh, Assam and Northeast — RCOM, on the other hand, has continuous bandwidth in all.

Access to the 800 MHz band is important for Reliance Jio, which has been trying to stitch together a 4G network at higher frequencies in the 2300 MHz band. The 2300 MHz airwaves, that Jio won in the 2010 auctions, can be blocked by walls whereas lower bands such as the 800 MHz, transcend concrete walls easily. The lower band is expected to help Jio achieve acceptable penetration for decent coverage without laying wires inside buildings.

The Union Cabinet on Wednesday allowed sharing of airwaves between telecom companies, a move that would help in more efficient use of the scarce natural resource while improving quality of calls and data speeds, and possibly lower tariffs as industry capex could fall. Spectrum sharing would be allowed only between two carriers in one service area, where both the licensees have airwaves in the same band — 2G, 3G or 4G.

The government also said that sharing of non-auctioned spectrum won't be permitted with auctioned airwaves, unless market price for the former is paid.