Jio Enhances Mobile Network with Rs 973.63 Crore Spectrum Buy in Bihar, West Bengal

Reliance Jio has expanded its radio waves holding for mobile services by acquiring additional frequencies worth Rs 973.63 crore in the latest spectrum auction. The company secured 5 megahertz paired spectrum in the 1,800 MHz band in Bihar for Rs 420.25 crore and 9.4 MHz in West Bengal for Rs 553.38 crore.

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Jio's Spectrum Expansion

With this acquisition, Jio has increased its 1,800 MHz band spectrum in two circles. The company's spectrum footprint now totals 26,801 MHz uplink and downlink, reinforcing its leadership position. "We have already demonstrated our commitment to the Digital India vision by rolling out one of the world's fastest and widest stand-alone 5G networks within 12 months of allotment of spectrum," said Reliance Jio Infocomm Chairman Akash Ambani.

The government had offered a total of 10 GHz of spectrum ranging from 800 MHz to 26 GHz, valued at Rs 96,238 crore at the base price. All available spectrum in bands including 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and 26 GHz were put up for auction. This year's auction saw activity mainly in the 900 MHz, 1,800 MHz, 2,100 MHz, and 2,500 MHz bands.

Financial Implications

Ankit Jain from ICRA Ltd noted that the spectrum realisation translates into an annual payout of around Rs 1,100 crore over a period of 20 years at an interest rate of 8.65%. "The participation in this spectrum auction was largely driven by renewals of expiring spectrum in the 900 MHz and 1,800 MHz bands," Jain said.

Jio is unique among Indian operators as it holds access to low-band (700 MHz), mid-band (3,300 MHz), and high-band (26 GHz) spectrums. This combination allows Jio to offer a superior experience to customers on its 5G network. High-frequency bands are ideal for high-speed services while lower frequency bands provide wider network coverage.

Industry Impact

Overall, the industry has purchased spectrum worth more than Rs 5.6 lakh crore across all auctions to date. This has resulted in a deferred liability of around Rs 4 lakh crore on telcos' books as of March 31, 2024. Despite these liabilities, Jain expects no significant adverse impact on the industry's balance sheet due to muted participation levels.

The Department of Telecommunications (DoT) sources indicated that the newly acquired spectrum would be allotted promptly. The total annual payments towards deferred spectrum liabilities for the industry will be around Rs 17,000 crore for FY2025 and over Rs 45,000 crore annually thereafter.

Debt levels stood at Rs 6.4 lakh crore as of March 31, 2024 but are expected to moderate to around Rs 6.2-6.3 lakh crore by March 31, 2025. This moderation is anticipated despite the addition of deferred liabilities due to expected improvements in profit generation.

Jain added that some purchases were made in the 2,100 MHz and 2,500 MHz bands to strengthen networks further. "This new spectrum acquisition will continue to enable us serving aspirations of the new India," Ambani stated.

Jio's strategic acquisition aims to meet growing traffic demands and enhance customer experience beyond urban markets. The company's comprehensive access across various frequency bands positions it uniquely to deliver robust services nationwide.

In summary, Reliance Jio's recent spectrum acquisitions bolster its network capabilities significantly while maintaining financial stability within the telecom sector.