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Jio may have saved $ 400 million in recent spectrum trading: Report

New Delhi: Jio’s spectrum deal with Airtel has led India’s largest telco to replenish its holdings in three major circles, resulting in a potential savings of approximately $ 400 million, the report said.
It is mentioned here that Reliance Jio has signed a contract with Bharti Airtel to acquire part of the 800 MHz band spectrum of the Andhra Pradesh, Delhi and Mumbai circles for a total of Rs 1,497. Two telecommunications giants that would otherwise compete fiercely in the market.
Market analysts call this deal “mutually beneficial” and “win-win for both.”
In a memo, UBS quoted Jio’s spectrum purchase in the 800MHz band in Andhra Pradesh, Delhi and Mumbai at a recently signed auction.
The total purchase cost is 13,500 rupees, which is cost / MHz / 300 million rupees per year considering the validity period of 20 years.
Reliance Geo, India’s largest carrier, has increased its holdings in these circles to 10MHz, 10MHz and 15MHz respectively through a contract with Balti, considering a total of Rs 1,497.
“The implicit cost / MHz / year is 140 million rupees because there is a validity period of 14 years left … 50% discount on the auction price. Therefore, Jio is 10 ~ in these major circles. Not only did we build a 15 MHz block, we also saved potentially $ 400 million. ”
This trade makes sense for Bharti, as this spectrum was obtained by Airtel from Tata with little consideration and remains unused. Therefore, Balti can unleash value from unused spectra, UBS Note explained.
“This deal strengthens Jio’s footsteps in these circles, but it’s important to note that Jio had the opportunity to buy this spectrum at the auction itself (enough 800MHz spectrum is available). To that extent, no strategic opportunities are lost. Balti. ”
In a deal announced earlier this week, Reliance Geo has acquired a “use right” for the 800 MHz spectrum in Andhra Pradesh (3.75 MHz), Delhi (1.25 MHz) and Mumbai (2.50 MHz). The total is 7.50MHz.
In accordance with the Spectrum Trading Agreement, Airtel will receive Rs 1,037.6 from Jio for the proposed transfer. In addition, Jio will assume future debt of Rs 459 related to the spectrum.
Radio waves are provided in different bands that support different propagation characteristics for the transmission of voice and data. For example, low bands like 800MHz and 900MHz support good indoor coverage, and high bands like 2300MHz have good transmission capacity. Radio waves are also sold in MHz units.
Credit Suisse said in a report that it could monetize unused Spectral assets by selling Spectral to Geo.
“In the case of Jio, the company can get an additional block of the 800MHz spectrum at a 47% discount from the government’s auction reservation price (proportionate to the rest of the license),” it said.
In addition, Credit Suisse pointed out that Jio now has a 2x10MHz continuous block with an 800MHz spectrum in the Andhra Pradesh and Delhi service areas, and a 2x15MHz block in the Mumbai service area.

Jio may have saved $ 400 million in recent spectrum trading: Report

Source link Jio may have saved $ 400 million in recent spectrum trading: Report

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