The Ambani brothers are set to sign a spectrum sharing-cum-trading agreement next week. The agreement will help Mukesh Ambani-owned Reliance Jio Infocomm to obtain more "bandwidth options" to roll out 4G services covering most of the telecom circles in India.
Executives from both Reliance Communications (RCOM) and Reliance Jio are expected to meet telecom department officials on Thursday, sources close to the development told The Economic Times.
"RCOM and Reliance Jio officials are meeting DoT officials on Thursday to discuss alignment of spectrum frequencies," they said.
Sources said that the meeting is a "precursor" to signing the spectrum sharing/trading pact, which could be announced as early as next week.
Stock price of RCOM was up 2.33% to trade at Rs 63.65 on Thursday on the Bombay Stock Exchange (BSE), after gaining over 11% in the previous session. The gains came after the central government approved telecom spectrum trading norms, enabling the sharing of airwaves among the operators.
"Trading will allow RCOM to also cut back its debt while allowing Jio to beef up its airwaves as it launches in December," said a source.
RCOM's debt stood at over Rs 38,000 crore at the end of quarter ending 30 June. The company is planning to trim its debt by selling its tower and overseas business units and also by monetising its DTH unit and real estate properties.
"With spectrum trading, we see the possibility of Jio potentially leveraging RCOM's 800 MHz in the remaining circles," Bank of America Merrill Lynch said in a note recently.
The ET had reported earlier that the spectrum sharing agreement would enable Reliance Jio to gain access to 10 MHz of contiguous 4G bandwidth in Mumbai, UP-East, Orissa, Madhya Pradesh, Bihar, Assam, Northeast, Haryana, Himachal Pradesh and Jammu & Kashmir,
On the other hand, the partnership will also be beneficial to Anil Ambani's RCOM, as it can use Jio's 4G network in the 10 circles without incurring any "incremental capex costs", the report said.
Jio, the telecom arm of Mukesh Ambani-led Reliance Industries is expected to start beta programme of 4G services in the coming weeks before launching commercially in December 2015.
In August, the company said that it would spend Rs.1 lakh crore towards launching 4G services in December. The company said that it had already invested three-fourth of the amount outlined for the services.
