Reliance Jio will have best spectrum holding after pan-India 4G airwaves sharing pact with RCom

Credit Suisse said Jio’s spectrum portfolio "is quite enviable" as it will be "the only operator with a pan-India sub-1 GHz liberalised spectrum.

Kalyan Parbat
  • Updated On Feb 23, 2016 at 05:59 PM IST
Read by: 100 Industry Professionals
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KOLKATA: Reliance Jio Infocomm will rapidly have the best spectrum holding across private telcos after the recent regulation paved the way for the Mukesh Ambani-owned carrier to ink a country-wide 4G airwaves sharing pact with Reliance Communications in the much-sought after 800 MHz band, said brokerage Credit Suisse.

But in the same breath, the Swiss brokerage warned that Jio runs a "repricing risk" of such spectrum in the sub-1 GHz band (read: 800 MHz) since bulk of these 800 MHz airwaves held by RCom will expire in July 2021, which would compel Jio to foot a minimum $3.8-billion bill to win these 4G airwaves back in an auction after four years.

The brokerage, however, said Jio’s spectrum portfolio "is quite enviable" as it will be "the only operator with a pan-India sub-1 GHz liberalised spectrum, and a 30 per cent share of all liberalised spectrum versus 20 per cent for Airtel".

This, it said, is since the Telecom Commission cleared the air on the market price of 4G airwaves in the 800 MHz band in Rajasthan, Karnataka, Kerala and Tamil Nadu, which will allow RCom to pay the market price and liberalise its airwaves in the four circles, and then share them with Jio.

Liberalisation means paying a market-linked price to the government for spectrum that wasn’t auctioned but assigned at government-set prices. A telco can only share or trade in liberalised airwaves.

Credit Suisse said Jio’s build-up of sub-1 GHz spectrum is "not without costs" since RCom’s 800 MHz spectrum (expiring in July 2021) will be put up for auction after four years. At that time, Jio could see itself in the same desperate position in 2020 "that (incumbents) Bharti Airtel, Vodafone India and Idea Cellular suffered in the 2014-15 auctions to win back the airwaves at any cost."

A top industry executive privy to the RCom-Jio spectrum sharing/trading talks, however, said: "Why are we assuming that Jio will wait till July 2021 when RCom’s 800 MHz airwaves expire? Hypothetically, what stops them from acquiring spectrum in the 800 MHz or 700 MHz bands in the next couple of auctions to boost their 4G-LTE spectrum holdings," said this person, speaking on condition of anonymity.

Reliance Communications’ stock rose 0.69 per cent to Rs 50.80 on the BSE on Monday.

  • Published On Feb 23, 2016 at 05:53 PM IST
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