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'Reliance may share RCom spectrum, launch 4G services by December'

'Reliance may share RCom spectrum, launch 4G services by December'

By Press Trust of India | Updated: 4 April 2013 17:36 IST

The agreement between telecom firms of Ambani brothers will help RIL launch 4G services by December, and the deal may be extended to spectrum sharing once new licence norms are finalised, investment banking major Goldman Sachs has said.

Billionaire Ambani brothers this week struck a Rs. 1,200 crore deal wherein Mukesh will use his younger sibling Anil's optic fibre network for launch of his telecom venture.

"RCom (Reliance Communications) will benefit in the coming months from new growth opportunities from RIL's telco business as it comes closer to launching its 4G services," Goldman Sachs said in a report.

"Apart from the already announced inter-city fibre sharing agreement, we see the possibility of agreements on towers, more fibre and spectrum leasing/sharing going forward," it added.

The government has in-principle approved spectrum sharing under new Unified Licences, and details for that are being worked out by the Department of Telecom.

Mukesh-led Reliance Jio Infocomm (RJI) and Anil-led RCom, under the new rules, can migrate to Unified Licences by paying Rs. 15 crore as entry fee. However to provide mobile telephony services, RJI will have to pay additional Rs. 1,600 crore.

RCom will have to also pay one-time spectrum charge to become eligible for spectrum sharing. DoT has raised demand of Rs. 173 crore demand for RCom's GSM spectrum and around Rs. 1,752 crore for CDMA spectrum.

Goldman Sachs mentioned that the 92.5 Mhz CDMA spectrum "could be a good fallback network option for RIL and reduce rollout cost".

It added that with monsoon expected in the next 2 months, it could be difficult for RIL to obtain permission to roll out fibre and build towers.

"So leasing them is a faster way to ensure timely rollout of services ahead of the planned launch of 4G services in Dec 2013," the report said.

Goldman Sachs said that it expects RCom to get "Rs. 6 per share value from the recent inter-city fibre optic network sharing deal with RIL. We also model a Rs. 3 per share additional value from potential further deals".

No comments were immediately received from the companies.

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