India’s Largest Integrated Telecommunications company Airtel and Reliance Jio have announced a comprehensive arrangement to share infrastructure created by both companies, including optic fiber network, towers, submarine cable networks and internet broadband services. The agreement can be extended in the future to cover roaming on 2G, 3G and 4G networks. Airtel’s infrastructure elements reduces RIL-Jio’s time to market its 4G services considerably. Airtel reeling under African Losses would want to lease out excess capacity to a Pure-Play 4G Player like Jio which probably has realized that it has no business case even for the next few years. Continue reading Airtel – Reliance Jio Infocomm Deal Positive for Industry, Bharti Infratel – Negative for RCom
The Indian Telecommunications Industry is Divided between the A-Vo-Id[Airtel, Vodafone Idea] Group on one side and the politically influential Ambani brothers on the other. Recently all telcos submitted their response to the TRAI’s consultation paper on Valuation and Reserve Price of Spectrum. The responses are as expected with A-Vo-Id Group arguing for no spectrum re-farming, a sharp reduction in spectrum prices and a sharp decline in spectrum usage charges. On the other hand, Deeply Debt Laden Reliance Communications along with Reliance Jio have argued for a complete re-farming of spectrum in 900 MHz but not the 800MHz. After going through each of the Comments, here we summarize the contentions of A-Vo-Id Group operators, Reliance Jio, RCom and others if any on Spectrum Related Issues for the forthcoming auction. Continue reading Telecom Spectrum Reserve Price: A-Vo-ID Group Fights Reliance Jio & Communications – Views of Operators
Reliance Communications and Reliance Jio Infocomm Telecom Tower Sharing Deal was expected to happen but the amount at which the deal has happened and the unanswered questions comes as a surprise to many of us. Like in the previous RCom-Reliance Jio Inter City OFC Sharing Deal which happened at 50% discount to the market price, the current Deal of RCom leasing space for Reliance Jio on 45,000 Telecom Towers has also happened at least 50% discount to market prices.
After running through various reports, news sources and arrogant managers of both the Reliance Group companies, the internal details of the deal is as follows,
RCom will share 45,000 Towers [Existing or New Ones] and they have to be Optimized the 2.6GHz Microwave Relay of Reliance Jio [Read that Tower Mast Height must be Raised by RCom]
We tried to get clarification on the Number of Years of deferred Payment involved in the deal, but no answer yet. Assuming for the balance life of the BWA / LTE spectrum of Reliance Jio, which is 17 years, the rent comes to ~ Rs13,070 per tower per month. Prevailing Tower Rentals on a conservative basis is definitely between Rs25,000 to Rs30,000.
If You Reduce the Number of Years in the Deal to say 15 Years, the Rent comes to ~Rs15,000 per tower per month. If You Further Reduce the Number of Years in the Deal to say 10 Years, the Rent comes to ~Rs22,000 per tower per month. In any case it is at is at ~50% discount to Bharti Infratel’s per tower per month rent of ~Rs35,000.
Why the Reliance Tower Sharing Deal has Happened at Discount ?
One Insider Source from whom I am picking up says that there is a reciprocal arrangement on sharing enhanced OFC Capacities in Future and the discount provided by RCom now will be given as a benefit later. Going by the Ambani Family Track record, I’d not rule out some other mutually acceptable arrangement, like Offshore account transfer between the two 😉
I fail to understand why the self claimed professional management of Reliance is silent on the deal [Citing Competition in this circumstance is not acceptable as this is a shady practice.] With Corrupt Regulator, SEBI not empowering shareholders, I don’t think we can expect anything more.
As Voice over LTE still lacks the QoS required and supported by 2G, globally, most operators are
currently using their 4G / LTE network for pure data and switching to the existing 2G/3G networks for voice calls. The following chart shows LTE Spectrum Band allotted in various countries and How Operators are Offering Voice Services.
There are 3 options for Reliance Jio to offer Voice – 1) Use its LTE network, 2) share spectrum with an existing operator or 3) acquire an existing operator.
We believe that challenges exist in offering voice using LTE network. In case of Reliance Jio Infocomm, the 2300MHz band is spectrally inefficient, especially for voice. Even for data, the capex implication will be high in case the company decides to have a relatively wide coverage using this spectrum band.
The remaining two options are likely to involve high entry cost which should curtail any disruptive behavior by Reliance Jio. TRAI recommendations on Spectrum Sharing suggest, operators that have paid the market price of spectrum (based on the auction prices) should be permitted to share spectrum without any additional one-time charge. It is currently silent on the non-liberalized spectrum but we should expect that any spectrum sharing would be allowed only after the operator pays the market price of spectrum – currently stands at $2 Bn for 5MHz pan-India spectrum in 1800MHz band. Even if Reliance Jio undertakes spectrum sharing with Reliance Communications, there would be significant cost implications for the parties involved.
Acquiring an existing operator will also involve high cost. Licensing 2G Voice as an MVNO may find favor since the M&A rules in the industry are not yet clear. Reliance Jio will not impact the A-Vo-Id cartel in the short-medium term but maybe case some turbulence in the long run.
Reliance Jio has a very high level of influence in policy making [Acknowledged by the Chairman, Mr. Mukesh Ambani himself stating “Congress Apni Dukaan Hai”] in the current potentially highly corrupt Government of India headed by Politicians of the Congress Party. Against this backdrop, expect some level of policies favoring Reliance Jio when it comes to Telecom Spectrum.
It comes as a Surprise that Reliance Jio Infocomm has chosen Airtel over Reliance Globalcomm [erstwhile Flag Telecom, acquired by Mukesh Ambani for just $200Mn] to route international data traffic via i2i submarine cable that connects India and Singapore.
i2i connects India to Singapore and is wholly owned by Bharti. Reliance Jio will utilize a dedicated fiber pair on i2i out of the available 8 pairs on Dense Wavelength Division Multiplexing technology. Continue reading Reliance Jio Infocomm to Use Airtel’s International Data Circuit
The DoT in 2008 allowed intra-circle roaming allowing operators [See Below] to enter into mutual commercial interconnect deals. Further in Queries & Responses prior to the 3G & BWA Auction, DoT clearly states in response to Question 12 as below,
12. Will intra circle roaming be allowed in areas where an operator does not have a 3G network?
Response: Intra-circle roaming will be governed by the UAS/ CMTS licence provisions and applicable Government regulations.
Further in Question No 48,
DoT order No. 842-725/2005-VAS/269 dated 12th June 2008 allows intra-circle roaming amongst UASL licensees. After 3G auctions not all existing UASL licensees will hold 3G spectrum in any licensed areas due to the limited 3G blocks on offer. Will customers of UASL licenses who do not hold 3G spectrum be allowed to roam on the 3G networks of other UASLs in the same licensed area? Response: The roaming policy is applicable to the licences and not to specific spectrum bands. Hence, roaming will be permitted. However, at present, mandatory roaming or MVNO is not part of the Government’s telecoms policy.
In Question 230 again,
Will intra-circle roaming be allowed for 3G & BWA?
Response The provision for intra-circle roaming is as applicable to the service licence, and is
not different for/ specific to the spectrum being currently auctioned.
From the above it is amply clear that DoT had given specific clarification that its policy allowing roaming was applicable to service licenses and was irrespective of spectrum band. 3G services have no separate license and 2G is different from 3G only because of the spectrum band. 2G services are offered in the 900 MHz and 1800 MHz bands while 3G spectrum was auctioned in the 2.1GHz band. Operators assert that roaming is different from spectrum sharing or trading, as spectrum remains with the roaming provider.
Airtel further argue that selling 3G SIMs in markets where they do not have 3G spectrum of their own is not a violation, as there is no generation of new radio access network and new numbering, and the spectrum stays with the operator who owns the 3G spectrum.
Indian Policy Makers except the Hon’ble Prime Minister of India [Dr.Singh] seem to have vested interest and are potentially highly corrupt twisting laws and regulations to favor a select few. I’m not aware of what changes DoT may have made in the Licenses so as to favor Reliance and Ambanis. With such pathetic Policy Makers / Politicians, Supreme Court of India is the only hope for justice.
Hopefully, 3G Intra-Circle Roaming arrangement stays and we continue to add more Indians on 3G Highway 🙂