Bharti Airtel to use spectrum sale proceeds to strengthen network

Informist, Wednesday, Apr 7, 2021


By Surbhi Prasad and Anant Chandak


NEW DELHI – Bharti Airtel will use the 10.4 bln rupees from the sale of usage rights for unutilised spectrum in three circles to Reliance Jio Infocomm Ltd to strengthen its network and capital expenditure, an official from the company said.


"It (proceeds) can be deployed in more sites to strengthen the network and we can use it in our existing 900 MHz spectrum band," the official said.


On Tuesday, the two companies said that the definitive agreement will give Reliance Jio usage rights for the 800 MHz band in Andhra Pradesh, Delhi and Mumbai circles through spectrum trading. Reliance Jio will also assume future liabilities of 4.59 bln rupees relating to the spectrum.


This is the first time the two rival telecom operators have entered into a spectrum trading deal.


The trading agreement is in accordance with the Department of Telecommunications' spectrum trading guidelines, and is subject to the requisite regulatory and statutory approvals.  


Post the approvals, RJio will roll out the spectrum in the respective circles, an official from the company said.


With this agreement, Reliance Jio will further consolidate its spectrum footprint in the three circles and increase its network capacity.


The telecom department had issued the guidelines for spectrum trading between two telecom service providers in 2015 to enable greater competition in the industry, incentivise innovation as well as facilitate ease of doing business. Analysts believe, the agreement highlights that RJio and Bharti Airtel can work together for a mutually beneficial cause.


"The deal is a win-win for both the companies," a Mumbai-based analyst said.


Bharti Airtel had got the above spectrum in 800MHz after it had acquired Tata Teleservice in 2019 and these spectrum bands were largely unused as the company had an existing 900MHz network in Andhra Pradesh, Delhi and Mumbai service areas.


"Hence, by selling the spectrum to RJio, Bharti Airtel is able to monetise the unused spectrum assets. For RJio, the company is able to get additional blocks of 800MHz spectrums at 47% discount from government auction reserve price (pro-rated for remaining period of the license)," Credit Suisse said.


With this agreement, Reliance Jio will further consolidate its spectrum footprint in the three circles and increase its network capacity, the company said.


According to Credit Suisse, Bharti Airtel will be a beneficiary of price hike in the near term or from continued market share gains from Vodafone Idea Ltd in case of delay in price hike.


At 1514 IST, shares of the Bharti Airtel were trading 1.7% higher at 541 rupees, while those of Reliance Industries were 1% higher at 2,003.40 rupees on the National Stock Exchange.  End


IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT


Edited by Maheswaran Parameswaran


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