Reliance Jio To Acquire Airtel's 800 MHz Band; Here's Why

To improve its network, Reliance Jio has entered into a right-to-use agreement with Airtel for its 800 MHz band in Andhra Pradesh, Delhi, and Mumbai. The agreement comes under Spectrum Trading Guidelines of the Department of Telecommunication. However, this agreement has to go through all regulatory approvals.

Notably, the aggregate value of the right to use the agreement is Rs. 1,497 crores. Also, Reliance Jio announced that it will clear all future liabilities of Rs. 459 crores. "The aggregate value for the right to use this spectrum is Rs 1,497 crores, inclusive of the present value of associated deferred payment liability of Rs 459 crores, subject to any transaction-related adjustments," Reliance Jio said.

After this trading agreement, Reliance Jio will have 2X15MHz and 2X10MHz in the 800 MHz spectrum in Mumbai, Andhra Pradesh, and Delhi circles. This might help the company to consolidate its position further in these circles. The telecom operator said that they are increasing their network capacity; however, this agreement requires all approvals.

"The sale of the 800 MHz blocks in these three circles has enabled us to unlock value from the spectrum that was unutilized. This is aligned to our overall network strategy," Gopal Vittal, MD & CEO (India and South Asia), Bharti Airtel said.

Reliance Jio Network Issues

Notably, Reliance Jio customers are not happy with the services due to network issues. The active users on its network are less than Airtel that offers a better network. In addition, Airtel added 6.9 million new users in January this year, while Jio lost subscribers. Apart from this transaction, Reliance Jio purchased more spectrum in the auction. The telecom operator emerged as the biggest player in the auction. The telco purchased spectrum in almost all bands worth Rs. 57,122.65 crores.

After this bidding, the telecom operator has managed to increase its spectrum reach by 55 percent to 117 MHz. On the other hand, Airtel bought spectrum worth Rs. 18,698.75 crores. The telecom operator acquired 355.45MHz of airwaves, whereas Vi (Vodafone-Idea) spent Rs. 1,993.40 crores for purchasing 11.80MHz spectrum. Notably, these spectrum bands have been allotted for 20 years.