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RCom will continue to hold spectrum edge over Reliance Jio after 800 MHz sale

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RCom 800 MHz presence

Anil Ambani-owned Reliance Communications Ltd will continue to hold a spectrum edge over Mukesh Ambani’s Reliance Jio in the 800 MHz band even after it sells chunks of 4G spectrum to the latter, according to sources.

The Anil Ambani group said yesterday that it would sell unspecified amounts of 4G-capable 800 MHz spectrum to Reliance Jio in nine circles, largely to raise money to pay to the Government to convert its CDMA spectrum to 4G spectrum.

According to sources, RCom is selling its spectrum in such a way that it will continue to hold at least 5 MHz of 800 MHz band spectrum in all circles even after the deal, including the spectrum that will accumulate with the merger of the company with the Indian arm of Russia-based MTS.

Having at least 5 MHz of spectrum in the 800 MHz band across India will give it much-needed leverage in any further negotiations with its arguably more-powerful partner, Mukesh Ambani-promoted Reliance Industries.

The structure of the deal also ensures that in the future, RCom can liberalize the spectrum acquired through the merger with MTS and launch its 4G network in this band without the need to depend on Jio, though it would need to depend on another partner for physical infrastructure such as base stations, or put up a new one.

Another result of the structure of the deal is that Reliance Jio will not be able to launch its own LTE network in the 800 MHz band in these circles without depending on RCom. At most, said a source, Jio will only have 3.75 MHz of spectrum without pooling RCom’s airwaves. LTE requires at least 5 MHz for optimum functioning.

Anil and Mukesh Ambani, despite being brothers, have had a tumultuous relationship in the past.

Under the partnership announced yesterday, RCom brings in most of the spectrum while Jio provides the network and much of the cash for conversion of the spectrum.

The two, however, are trying to put the past behind them and join in an effort that massively reduces the cost of 4G launch for the younger one, while giving an easy fix to coverage related problems for Jio.

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