Two of the most bitter rivals in the telecom industry, Reliance Jio and Bharti Airtel, have signed a spectrum agreement. The deal marks the first-ever such deal between the two companies. Here’s what the deal is all about.
What is the deal about
Airtel is selling a part of its spectrum to Reliance Jio in some circles. The company has signed a “definitive” trading deal to sell its 800 MHz spectrum to Reliance Jio Infocomm.
How much money will Airtel get from the deal
“Through this agreement, Airtel will receive a consideration of Rs 1037.6 crores from Jio for the proposed transfer. In addition, Jio will assume future liabilities of Rs 459 crores relating to the spectrum,” Airtel said in a statement.
What are the telecom circles that the Airtel-Jio deal covers
The deal to sell 800 MHz spectrum to Reliance Jio Infocomm is for Andhra Pradesh, Delhi and Mumbai circles. Airtel will sell 3.75 MHz of bandwidth in Andhra Pradesh, 1.25 MHz in Delhi and 2.50 MHz in Mumbai, subject to regulatory and statutory approvals.
What makes this deal significant
The deal is important as it reflects the willingness of the two of the largest telecom companies in India to work together despite being at loggerheads for years. The duo have been locked in a bitter war ever since Reliance Jio entered the telecom sector in 2016
What the deal means for Reliance Jio customers
The deal will help improve network quality for Jio users in these circles. In a statement Jio said that the enhanced spectrum footprint, especially of continuous spectrum needed for quality 4G services, and superior infrastructure has further increased its network capacity.
Airtel: The deal will help us realise the value of unlocked spectrum
“The sale of the 800 MHz blocks in these three circles has enabled us to unlock value from spectrum that was unutilised,” Gopal Vittal, MD (India and South Asia), for Bharti Airtel said in the statement. An Airtel official told economic times (ET) that the primary reason for sale of spectrum in the 800 MHz band in the three circles was because it didn’t quite sit well with the telco’s spectrum strategy. “Our holding in certain circles was very fragmented, under 5 MHz and didn’t justify the capex,” the official said, asking not to be named.
The deal goes with our spectrum strategy
In the recently- concluded spectrum auctions, Airtel reportedly purchased 355.45 MHz of spectrum for Rs 18,699 crores. “The company bought additional 800 only in circles where it could be integrated well with the network and was in a good quantity,” the official explained. It further beefed up its capacity spectrum in the capacity bands of 1800, 2100 and 2300 Mhz. “It is 900, 1800 and 2300 MHz for the company right now, that’s the spectrum strategy,” the executive told ET.