Here’s why Reliance Jio bought spectrum from Bharti Airtel

Bharti Airtel on Friday announced the closure of its agreement with Reliance Jio Infocomm to transfer the 'Right to Use' of Airtel's 800 MHz spectrum in three circles to the Mukesh Ambani-led firm.

Airtel said in a statement it has received Rs 1,004.8 crore (net of tax) from Jio for the proposed transfer.

Besides this, Jio will assume future liabilities of Rs 469.3 crore relating to the spectrum, the statement added.

In a late evening statement, Jio said: "With this trading of right to use spectrum, RJIL will have 800 MHz band spectrum footprint of 2 x 15MHz in Mumbai circle and 2 x 10 MHz each in Andhra Pradesh and Delhi circles, thereby further enhancing network experience of its customers."

Reliance Jio Infocomm Ltd (RJIL) said it has paid total consideration of Rs 1,183.3 crore (inclusive of taxes) to Bharti Airtel and has assumed deferred payment liability with net present value of Rs 469.3 crore.

Jio's pact with Airtel to buy the spectrum in 800 MHz band was announced in April this year and marked the first such deal between the two telecom giants.

Airwaves come in different bands which support different propagation characteristics for the transmission of voice and data. For instance, lower bands like 800 MHz and 900 MHz support good indoor coverage while higher bands like 2300 MHz have a good carrying capacity.

The airwaves are also sold in quantities measured as MHz. Spectrum auctions, held earlier this year, had raked in winning bids of over Rs 77,800 crore for 855.6 MHz of spectrum.

Billionaire Mukesh Ambani's Reliance Jio spent the most in the auction, picking up 488.35 MHz spectrum in bands such as 800 MHz, 1800 MHz and 2300 MHz for over Rs 57,100 crore.

In the auction, Bharti Airtel won the right to use spectrum, the total value of which is about Rs 18,700 crore. For Vodafone Idea, the value of spectrum bought in auctions was pegged at Rs 1,993.4 crore.

There were no takers for spectrum in 700 MHz and 2500 MHz bands in the last auctions.

As per latest data available from telecom regulator Trai, the Indian telecom market had presented a picture of sharp contrast in May with Bharti Airtel losing a staggering 46.13 lakh wireless subscribers even as rival Reliance Jio added 35.54 lakh mobile users.

Overall, the Indian mobile market shed 62.7 lakh users in May. In fact, both Airtel and Vodafone Idea had suffered massive subscriber losses in the month.

Airtel lost 46.13 lakh mobile users and ended the month with a subscriber base of 34.8 crore.

Vodafone Idea -- which is currently in the grip of an existential crisis -- had seen its mobile subscriber base shrink by 42.8 lakh users in May, to 27.7 crore users.

Billionaire Kumar Mangalam Birla recently stepped down as chairman of Vodafone Idea Ltd, within two months of offering to hand over the Aditya Birla Group's stake in the debt-laden telco to the government, in a bid to avert a crisis for the telecom company.

Vodafone Idea (VIL) had an AGR liability of Rs 58,254 crore, of which the company has paid Rs 7,854.3 crore while Rs 50,399.6 crore is outstanding.





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