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5,384 crore paid by Reliance Communications for spectrum policy

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Mumbai: A sum of Rs 5383.84 crores was paid by Reliance Communications on Wednesday to the government as a fee for spectrum sharing and trading in 16 circles for the 800-850 MHz band. This payment comes after the announcement of a pact with Jio for nine service areas.

This also follows a statement by the company a week ago that while it heard from the Department of Telecommunications (DoT) regarding its plans for sharing and trading in scarce airwaves in the 800-850 MHz space, it was awaiting the response in four other circles.

The company statement said it has already been granted a stay by the Kolkata High Court not to furnish any bank guarantee towards one-time spectrum charge, as had been demanded earlier by the government.

Sources said Reliance Communications wanted to pursue spectrum trading in nine circles with Jio and sharing it with Jio in 17 circles.

“Sharing will eventually cover all 22 circles in the 800 MHz band. But we want some clarity in Rajasthan, Kerala, Karnataka, Tamil Nadu and Jammu and Kashmir,” a source said.

Reliance Communications has a presence in all the 22 circles in the 800 MHz space, with a total of 113.75 MHz, out of which 33.75 MHz has been earmarked for Jio. This will leave the company with 80 MHz, with an option to share the same under various agreements.

Reliance Communications had announced on Monday that it has signed an agreement for trading and sharing of scarce airwaves, or radio frequency spectrum, with Jio in the 800 MHz band, covering virtually the entire country. A roaming agreement, it had added, was also on cards.

Two other developments will have a bearing on the spectrum plans of Reliance Communications to buy rival Aircel from Malaysia’s Maxis Communications and Sindya Securities, and another to merge with itself Russia’s Indian telecom arm Sistema that operates under the “MTS” brand.

However,  if these two deals happen, RCom-Aircel-MTS wireless combine will have over 150 million customers in India and hold close to 20 percent of the total spectrum highest in the country in virtually every band currently available to private players and every circle. (IANS)(image:en.wikipedia.org)

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Jefferies: Jio’s Sharp Discount Postpaid Offer May Hit ARPU of Other Players

The report further said postpaid churn is lower and it is believed that shift to Jio will be gradual

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Jio’s sharp discount postpaid offer may hit ARPU of other players.
Jio’s Sharp Discount Postpaid Offer May Hit ARPU of Other Players. IANS

A day after Reliance Jio announced its postpaid offer at Rs 199, global investment banking firm Jefferies on Friday said the sharp discount launched by Jio would make incumbents respond to it which may further cut average revenue per user (ARPU) for Bharti and Idea.

Jio on Thursday launched a new postpaid plan at Rs 199 offering 25GB of data and unlimited voice and SMS. It is also offering international roaming rates of Rs 2/min for voice, Rs 2/MB for data and Rs 2/SMS. It also offers Rs 500/day roaming pack with Unlimited voice/data/SMS. The subscription will start from May 15.

Jio
Jio (Wikimedia Commons)

“This is at 50 per cent discount to comparable packs by incumbents and 60 per cent discount to postpaid ARPUs. We have been concerned on Postpaid as it contributes 20 per cent plus of revenues. With the sharp discount launch by Jio we expect incumbents to also respond and thus expect further decline in ARPU for Bharti and Idea. This is likely Jio’s first offer aimed at enterprise market. Remain cautious on the sector,” the Jefferies report said.

“We have been concerned on the postpaid revenues for incumbents given the cost to consumers is 3x of prepaid. Postpaid while making up only 7 per cent of Top 3 operators subscribers, contribute 20 per cent plus of their revenues. While the ARPU for the segment had dropped 25 per cent it was lower than that witnessed in prepaid,” it added.

Also Read: Reliance Jio Launches AI Based Platform — JioInteract

” Incumbents will, in our view, have to respond to Jio’s plan and cut plan prices. Any 10 per cent cut in postpaid prices will lead to around 2 per cent cut in overall ARPU. Any 10 per cent cut in postpaid prices will lead to 12 per cent/6 per cent EBITDA (Earnings before interest, tax, depreciation and amortization) hits for Idea and Bharti respectively,” the report said.

The report further said postpaid churn is lower and it is believed that shift to Jio will be gradual. “Around 40 per cent of the postpaid customers are corporate, and these would be a key target, in our view.” (IANS)

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