In what could be a rare combination in the Indian telecom sector, the Ambani brothers are reportedly tying up to offer fourth generation (4G) telecom services, after the Narendra Modi government permitted the companies to share the spectrum.
The partnership between Reliance Communications (RCOM) and Reliance Jio Infocomm will allow the Mukesh Ambani-owned telecom company to provide 4G services over the 800 MHz band across 10 circles.
The spectrum sharing agreement will 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, The Economic Times reported, citing a source close to the development.
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.
Showing a sign of possible pact between the two companies, RCOM has asked the permission of the telecom department (DoT) "to progressively liberalise its old 800 MHz spectrum holdings in all the 10 circles that were originally assigned without auctions at government-set prices."
In the telecom parlance, Liberalise means "paying market-linked price" for spectrum that was not auctioned by the government.
The cost of spectrum liberalisation applied by RCOM is estimated to be in the range of Rs.1,500-1,800 crore.
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.
Last month, 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.
The company said that it was partnering with a few handset makers to roll out 8-10 million 4G devices per month in India, with most of them to be priced below Rs.4,000.
Reliance Jio may offer data plans at a third of "current market rates", when it rolls out 4G services in December, this year.