Bharti Airtel signs Rs 1,004 crore spectrum trading agreement with Reliance Jio

Bharti Airtel on Friday, August 13, declared the completion of its pact to transfer the 'Right to Use' of its 800 MHz spectrum in three circles to Reliance Jio Infocomm. The deal with the Mukesh Ambani-led telecom operator was closed by Airtel at 1004.8 crore. Along with spending the sum to secure the spectrum, Reliance Jio also took over future liabilities amounting to Rs 469.3 crore relating to the same.

Airtel and Jio signs spectrum trading agreement

The agreement sees Reliance Jio has now taken control of Bharti Airtel’s spectrum in Andhra Pradesh, Delhi, and Mumbai circles at an aggregate value of Rs 1,497 crore. Jio now holds 10MHz, 10MHz and 15MHz, respectively in these circles. The agreement made currently waits for necessary statutory approvals. The deal also reflected on the stock market, as Bharti Airtel’s shares touched a record high of 638.60 on Friday.

According to market experts, the deal comes as a great one as the pact is useful to both companies involved. Bharti Airtel, which had earlier acquired this spectrum from Tata, had left it unutilised. For Reliance Jio, the deal gives an upper hand over its competitors as lower spectrum bands like 800 Mhz and 900 Mhz provide greater indoor coverage, which the network could use for better service. Airtel MD and CEO, Gopal Vittal, stated that the sale of the 800 MHz blocks unlocks the value of an unutilised spectrum for the company, and is in line with the company’s strategy.

Supreme Court dismisses plea filed by Bharti Airtel citing error in AGR calculation

After reserving the order on AGR dues last year, the Supreme Court on July 23 dismissed applications filed by Bharti Airtel seeking a re-computation of the Adjusted Gross Revenue (AGR). The apex court observed that the recalculation was prohibited based on the earlier order. Last year in September, the top court had allowed telecommunication companies to pay AGR dues in a staggered manner however later the companies including Airtel and Vodafone Idea alleged errors in calculations made by the Department of Telecommunications (DoT). Reliance Jio Infocomm is the only phone company that has met the Supreme Court’s adjusted gross revenue (AGR) dues deadline, paying Rs 195 crore in January 2020.

SC's 2019 order on AGR dues

In October 2019, the apex court ruled in favour of the Centre allowing the DoT to recover Rs 92,641 crore in total AGR from operators in India. The telcos paid the license fee and spectrum usage charges (SUC) on AGR which amount to Rs 92,641 crore. The SC ruled that the DOT's claims on the definition of AGR as well as the applicability of interest, penalty, and interest on penalty are both valid and that the operators are liable to pay 100 per cent of the demand that DoT has raised.

IMAGE: PTI