4G brings Ambani brothers together

Come December, Ambani brothers would be operating their telecom businesses together. They have already intimidated the telecom department (DoT) about their intention to share airwaves and offer 4G services in 10 key markets.

Mumbai, Madhya Pradesh, Bihar, UP-East, Haryana, Himachal Pradesh, Odisha, Assam, Northeast and Jammu & Kashmir would experience the historical CDMA band of 800-850 MHz. This would collectively make up more than 35% of overall pan-India telecom revenues for the Anil Ambani-owned RCom and Mukesh -owned Reliance Jio, as informed in the news report by The Economic Times.

The spectrum sharing and trading pacts signal the increasing cooperation in the telecom space between the two brothers. With such pacts, and with a complete passive infrastructure sharing pact in the bag, which involves sharing towers and optic fibre, RCom and Jio are operating as all but one company.

"This overall strategic cooperation and partnership between Reliance Jio and Reliance Communications is a virtual consolidation in the telecom sector," Anil Ambani had recently said at his company's most recent annual meeting.

The cooperation would entail maintenance and servicing of infrastructure, common network operating centres, data centres, content and retail outlets, people familiar with the plans said.

The architects of the Jio telecom plans majorly overlap with founding team of Reliance Communications, which was started under the patriarch Dhirubhai Ambani. Subsequently, during the split of the RIL empire in 2006, many members of the founding team joined Mukesh Ambani, who had signed a non-compete agreement in the businesses he ceded to his younger brother. The non-compete agreement was revoked in 2010, the year when Reliance Industries re-entered the telecom space.

The pacts now done, one important piece in the plan is RCom's talks to merge Sistema Shyam Teleservices, which is a pureplay CDMA operator, with itself, discussions for which are at an advanced stage and could even close in a couple of months, the ET report said.
Sistema, with its 10 million subscribers across nine service areas, has airwaves in the 800MHz band, which are considered ideal for 4G services. The bandwidth that RCom is using for its CDMA and ones that Jio has bought in the 800MHz band are largely continuous. This means, the ET says, the RCom must free as much of that for the two companies to have a better 4G rollout.

RCom has 3G (2100 MHz) airwaves in 13 circles, 800 MHz in 19 and 1800 MHz (traditionally used for 2G) in all 22 circles.

For the entire combination to work involves more careful stitching up of networks. A person said this has translated into Jio focussing on fewer number of cities for its initial launch likely in December. The company had earlier intended to start in 200 cities, but is now focusing on around 50.

RCom has already applied with DoT to liberalise its old 800 MHz spectrum holdings in eight of the 10 circles that they will share with Jio, which will cost nearly.'2,000 crore. It already has liberalised 800 MHz airwaves in Assam and Northeast. It will shortly apply for liberalising its balance old 800 MHz spectrum holdings in the remaining 12 circles.