Reliance Jio Will Pay Airtel Rs 1500 Crore For Using Spectrum In These Cities; What Does This Mean?

By Arpita Last updated Apr 7, 2021

Reliance Jio has acquired the "right to use" of Bharti Airtel's 800 MHz spectrum in three circles: Andhra Pradesh (3.75 MHz), Delhi (1.25 MHz), and Mumbai (2.50 MHz). — Reliance Jio has acquired the “right to use” of Bharti Airtel’s 800 MHz spectrum in three circles: Andhra Pradesh (3.75 MHz), Delhi (1.25 MHz), and Mumbai (2.50 MHz).

On Tuesday, April 6, Mukesh Ambani’s Reliance Jio Infocomm declared that it had reached an agreement with Bharti Airtel Limited to acquire the right to use spectrum in the 800MHz band in the Andhra Pradesh, Delhi, and Mumbai circles through spectrum trading.

Reliance Jio Ties Up With Bharti Airtel

Reliance Jio has acquired the “right to use” of Bharti Airtel’s 800 MHz spectrum in three circles: Andhra Pradesh (3.75 MHz), Delhi (1.25 MHz), and Mumbai (2.50 MHz).

According to Reliance Jio’s claims, the aggregate value for the right to use this spectrum is Rs 1,497 crores, which includes the present value of an associated deferred payment liability of Rs 459 crores, subject to any transaction-related adjustments.

Through this agreement, Sunil Mittal’s Airtel will receive a consideration of Rs 1,037.6 crore from Reliance Jio for the proposed transfer.

“The sale of the 800 MHz blocks in these three circles has enabled us to unlock value from the spectrum that was utilised. This is aligned to our overall network strategy,” said Gopal Vittal, MD & CEO (India and South Asia), Bharti Airtel.

The Trading Agreement

Reliance Jio said in a separate statement that it will now have 2X15MHz of spectrum in the 800MHz band in the Mumbai circle and 2X10MHz in the 800MHz band in the Andhra Pradesh and Delhi circles, enabling it to further consolidate its spectrum footprint in these circles.

“The trading agreement is in accordance with the Spectrum Trading Guidelines issued by the Department of Telecommunications and is subject to the requisite regulatory and statutory approvals. The aggregate value for the right to use this spectrum is Rs 1,497 crores, inclusive of the present value of associated deferred payment liability of Rs 459 crores, subject to any transaction related adjustments,” Reliance Jio added.

Meanwhile, in the Spectrum Auction 2021, Reliance Jio emerged as the top buyer and cornered more than half of the telecom spectrum auctioned by the government. Reliance Jio was the biggest bidder acquiring 488.35 MHz of spectrum for Rs 57,122.65 crore. The majority of auction payout by Reliance Jio will be for the spectrum in the 800 MHz band (Rs 34,491 crore). Reliance Jio was followed by Bharti Airtel which bid for 355.45 MHz of spectrum for Rs 18,698.75 crore.