14 Aug , 2021 By : Kanchan Joshi
Bharti Airtel Ltd on Friday said it has achieved the closure of its agreement with rival Reliance Jio Infocomm Ltd to transfer the ‘Right to Use’ of Airtel’s 800MHz spectrum in three circles to Jio.
Airtel has received Rs1,004.8 crore (net of tax) from Jio for the proposed transfer. In addition, Jio will assume future liabilities of Rs469.3 crore relating to the spectrum.
The spectrum sale, the first such trade between the two rivals, was first announced in April. The sale of spectrum—in Andhra Pradesh, Delhi and Mumbai—is expected to benefit both telcos. The deal will help Jio build capacity in three key circles, save 50% of the total cost that it would have otherwise had to bear to buy airwaves in a government auction. Jio could have bought the spectrum in the auctions concluded in March, where the department of telecommunications (DoT) put enough 800MHz band under the hammer but chose not to.
Jio provides only 4G wireless service, largely using 800MHz. “Jio, through the deal with Airtel, has topped up its holding in these circles to 10MHz, 10MHz and 15MHz, respectively. With remaining validity of 14 years, the implied cost/MHz/annum comes to Rs14 crore, a 50% discount to the auction price," UBS said in a report in April.
“Jio has, therefore, not only built up 10-15MHz blocks but has potentially saved $400 million."
The spectrum purchase also underlines Jio’s focus on increasing its market share. Higher network capacity and improved service quality in these circles may help the telco retain and add more customers.
For Airtel, the sale allows it to unlock the value of the unutilized spectrum that it received from the acquisition of Tata Teleservices Ltd. Airtel has not used the acquired spectrum so far as it has an existing network built on 900MHz band in Andhra, Delhi and Mumbai. Besides, the Sunil Mittal-led firm bought pan-India sub-gigahertz, or sub-GHz, mid-band and 2,300MHz spectrum in the 4G auction in March. The sub-GHz band will enable the operator to improve 4G coverage indoors and in rural areas.
Airtel shares closed 2.21% higher at Rs637.05 apiece on Friday on BSE, outperforming a 1.08% rise in the benchmark Sensex.
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