Reliance Communications, Jio Infocomm Rs 4,500 crore airwaves trading pact next week

NEW DELHI: Reliance Communications is set to sign a pact with Mukesh Ambani-owned Reliance Jio Infocomm next week to sell its airwaves in the 850 Mhz band – which can be used for 4G LTE – in 12 circles through a trading agreement for around Rs 4,500 crore.

Sources said RCom will use the funds from the pact to pay for most of the Rs 5,384 crore that the telecom department has sought to liberalise its airwaves in 16 circles. Besides, the two companies will sign a pact next week to share spectrum in all 22 circles, post the trading deal, which will allow the combination of Jio and RCom to offer 4G LTE on 850 MHZ band nationwide.

On payment of Rs 5,384 crore and submitting a bank guarantee of around Rs 1,569 crore demanded as one-time spectrum usage charge (OTSC), India’s no. 4 telco will be able to offer 4G services on those airwaves, and will be allowed to share and trade the bandwidth as well. The due date for the payment is January 20. RCom declined to comment while queries to Jio did not elicit a response.

RCom’s stock had fallen a sharp over 8% in intra-day trade on Wednesday, a day after reports that the telecom department had raised a demand of a total of Rs 6,953 crore on the telco for liberalisation of spectrum in 16 circles. The stock closed down 1.7% at Rs 78.85 on the Bombay Stock Exchange, underperforming the broader market. The scrip though was off an intra-day low of Rs 73.80. RCom had applied for liberalising its 850 MHz spectrum in 20 circles. It has not received any notice for four circles – Kerala, Karnataka, Rajasthan and Tamil Nadu – where the market-determined price is not available.

Operators opting to share or trade spectrum not bought at an auction must first pay a marketlinked price to the government, a process known as ‘liberalising’ airwaves. Liberalisation will free up spectrum for providing services using any technology.