Making it official, Reliance Jio Infocomm Ltd and Reliance Communications Limited (“RCOM”) today announced the signing of agreements for the sale of 800 MHz spectrum in 9 Circles by RCOM to Reliance Jio, and for sharing of spectrum in 800 MHz band across 17 Circles.
As part of the enhanced strategic collaboration, both Companies also intend to enter into reciprocal Intra Circle Roaming (“ICR”) arrangements.
This would enable RCom subscribers to use their 4G-enabled handsets on Reliance Jio network as if it was their home network. However, the tariff that they have to pay will be determined by Reliance Communications.
However, it is expected that RCom, owned by Anil Ambani, will give data at largely the same rates as Jio, which is expected to sell data at very low rates.
This would require RCom to cut its data prices further to match those of Jio.
At present, RCom charges about Rs 250 for 1 GB, and around Rs 3000 for 36 GB, implying a price of around Rs 80 per GB.
Jio is expected to offer 20-50 GB for around Rs 1,000 per month. Last year, RCom announced a 40 GB plan for around Rs 1,150, but only for postpaid users. It also not clear if the 40 GB plan is still open to new customers.
RCom has also put up cheap data plans in recent times for Maharashtra and UP West circles.
In Maharashtra, it offers 30 GB for Rs 149 per month on its EVDO network, according to its website. In UP West, it offers 10 GB for Rs 178 per month. These are much cheaper compared to any other data plan in India.
The financial details of the deal with Reliance Jio were not disclosed.
It is assumed that RCom will be able to recover the money for paying liberalization charges for the entire 17 circles from the sale of liberalized spectrum to RJio in nine.
Access to enhanced spectrum footprint in the 800 MHz band will complement RJIL’s best-in- class LTE services rollout, providing increased network coverage and superior service quality, the companies said.
“The spectrum arrangements between RJIL and RCOM will result in network synergies, enhanced network capacity and will optimise spectrum utilisation and capex efficiencies. Both operators anticipate considerable savings in operating costs and future investment in networks,” RCom said.
RCOM’s customers will benefit from access to Reliance Jio’s world class nationwide 4G LTE network under the reciprocal sharing and ICR agreements.
This is seen as a win win deal for both Ambani brothers as it gives crucial coverage-spectrum to the elder brother, Mukesh, while helping the younger one, Anil, to have a pan-India 4G network for RCom’s subscribers virtually at the flick of a switch.
Other operators like Idea Cellular, Vodafone and Bharti Airtel are struggling to roll out 4G, especially since they have low-penetration frequencies such as 2300 MHz andn 1800 MHz.
The arrangements are subject to liberalisation of RCOM spectrum in the 800 MHz band and obtaining requisite approvals.
These agreements further strengthen the comprehensive framework of business co- operation between RJIL and RCOM GROUP, following the nationwide long term IRU agreements for inter and intra city optical fibre networks, and for sharing of telecom tower infrastructure.
IMPACT ON OTHERS
The deal has changed the competition dynamics in the industry. There was a sort of unofficial consensus among the major players that they will not push for the auction of 700 MHz 4G spectrum immediately.
Bharti Airtel and Idea Cellular had joined Reliance Jio in requesting the TRAI to postpone the upcoming 700 MHz spectrum auction.
However, now that Jio has announced a deal to buy the adjacent 800 MHz spectrum from Anil Ambani’s RCom, the dynamics has changed once again.
Idea and Airtel use 1800 MHz spectrum for their 4G services. However, this spectrum is not very good for delivering services inside concrete jungles or out in the rural countryside. As a result, RCom and Jio are expected to have an upper hand in terms of coverage and signal quality compared to all other 4G networks in India.