Reliance Communications, Jio Infocomm in talks for spectrum sharing & trading: Anil Ambani

MUMBAI: Reliance Communications is in advanced talks to share and trade spectrum with Mukesh Ambani-led Reliance Jio Infocomm, company chairman Anil Ambani said on Wednesday. "These arrangements (for spectrum in the 800-850 MHz band) will facilitate RCom customers access to Reliance Jio's world class 4G/LTE networks on an asset-light and minimal capex model," Ambani told company shareholders at the annual general meeting of Reliance Communications.
Ambani also said RCom could announce the sale of its stake in its tower unit in next couple of months and that its talks to merge Sistema Shyam's business with itself are at an advanced stage, in other moves that would help the company pare its debt that stood at over Rs 38,000 crore at June end. ET had first reported that RCom and Jio were discussing sharing airwaves in 10 circles early this month, but once trading rules were cleared by the Union cabinet, the impending tieup has been broadened to a likely pan-India sharing and trading pact.

Ambani said the deal would include a reciprocal roaming agreement. For Reliance Jio, which is setting up its network on 4G technology, there is a need to fall back to earlier technologies for voice and RCom has it ready, he said. India's fourth largest telecom company, which has for the last six months maintained it was making a foray into 4G services, would need to liberalise its frequencies in the 800-850 MHz band, historically used for CDMA services, by paying the Indian government the price discovered for the band in the airwave auction held in March.

The payment issue was keeping its share prices in check. However, with an imminent trading agreement with Jio, the buyer is likely to foot that bill estimated at Rs 6,000-7,000 crore, people familiar with the matter said. RCom stock on Wednesday ended 6.3% higher on the BSE at Rs 67.90, outpacing gains in the broader market.

A Goldman Sachs report had earlier said that a deal with RCom will strengthen Reliance Jio. Nitin Soni, director corporates at Fitch Ratings, said the move is "credit positive for RCom given that it has about $6 billion of net debt on its balance sheet" and the deal will give some cash inflow for the company. ET had reported that US-based Farallon Capital, Carlyle, Tillman Capital, and American Tower Corp had put in bids to buy 51%-100% of RCom's tower business arm Reliance Infratel, which has some 45,000 towers.

Infratel was being valued at betweenRs 20,000-24,000 crore, including aboutRs 8,000 crore in debt. Sources had indicated that the deal could close by October end, and that RCom prefers to completely exit the business. To trade its 800 MHz airwaves, which are ideal for Jio, RCom would need to shift its CDMA subscribers to an alternate band.