Thursday, December 17, 2015

Vodafone, Reliance Communications, may clinch 3G, 2G roaming agreements

Telecom operators Vodafone and Reliance Communications are likely to sign 3G and 2G intra-circle roaming (ICR) agreements across five circles, including Bihar, West Bengal and Odisha.

The two companies are also in advanced talks to share the 3G spectrum in Delhi and Mumbai in order to reduce their operational expenses as well as improve quality of service.

"Reliance Communications and Vodafone have, in-principle, agreed to sign 3G intra-circle roaming agreements with a fallback on 2G network in five service areas. The deal is expected to be finalised within a week," sources in the know told PTI.

When contacted, a Vodafone India spokesperson said: "We are not commenting on this at the moment." The Reliance Communications spokesperson too declined to comment.

The deal will enable RCom to continue its 2G service by using Vodafone's spectrum in Bihar, West Bengal and Assam, where it only has a 3G spectrum.

Though the 3G and 2G customer break-up is not known in these areas, the company has had strong network penetration in these service areas, especially in Bihar.

Under 3G-ICR, telecom operators without 3G spectrum in a circle use their partner's network to sell and operate the services.

The 3G intra-circle agreement has been held valid by telecom tribunal TDSAT, but the Department of Telecom has challenged it.

In March, RCom had failed to win back 900 Mhz spectrum it used for 2G mobile services in West Bengal, Bihar, Assam, Odisha and the North-East service areas, and its right to use this spectrum ended on December 12. RCom lost some 4.7 lakh customers in July-September in Bihar this year.

According to a Nokia Network report, Bihar and West Bengal have the lowest penetration of active 3G handsets as 2G services dominate.

"This fits into RCom's asset-light strategy after reducing debt by tower stake sale. RCom will have lowest debt among Indian telecom operators while Vodafone will lower its operational expenses," one of the sources said.

The company has been looking to lower the cost of ownership and monetise the assets to lower debts.

On December 4, the Anil Ambani-led firm had said it has signed a non-binding pact to sell its cellular towers to private equity firm Tillman Global Holdings LLC and TPG Asia Inc at an estimated Rs 30,000 crore deal to pare debt.

As per a recent report by brokerage firm CLSA, Reliance Communications' (RCom) impending deal for tower asset sale would lower its consolidated debt by 60 per cent.

RCom is also finalising a spectrum-sharing deal with Reliance Jio for its 800 MHz spectrum, which as per CLSA, will unlock the value of embedded assets while reciprocal benefits in infrastructure and spectrum sharing will spur a data business ramp-up.

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