Mukesh: Preparing to start fourth-generation mobile phone services in India in 2016.

Bloomberg
Mumbai

Billionaire Ambani brothers are in talks to expand their wireless airwave sharing pact to nine regions from seven as Mukesh Ambani, India’s richest man, prepares to start his fourth-generation mobile phone services in 2016, people familiar with the matter said.
His Reliance Jio Infocomm, which is spending $15bn to build the service, seeks to add two more circles in the 800 megahertz frequency band over the next couple of months to the spectrum sharing pact with younger brother Anil Ambani, the people said, asking not to be identified as the talks are private. Reliance Jio is awaiting regulatory approval to share airwaves in the seven regions with the latter’s Reliance Communications. The expanded accord between the brothers is crucial for Reliance Jio to start services, which have been delayed by a quarter. Mukesh Ambani had indicated a December start in Reliance Industries’ annual shareholder meet in June. The airwaves controlled by Reliance Communications are suitable for transmitting data at high speeds, while bulk of the frequencies Reliance Jio bought for $5.1bn are in higher bands, which require more investment to transfer movies, documents and voice over the Internet.
“Reliance Jio’s business model and profitability is contingent on their getting access to frequency bands below 1,000 MHz,” said Naveen Kulkarni, an analyst at PhillipCapital India in Mumbai, since higher bands hinder heavy data and voice transmission. “It also gives Reliance Communications a good opportunity to monetise its spectrum.” Reliance Jio declined to comment on the deal in an e-mail response. A Reliance Communications spokesman didn’t immediately respond to an e-mail.
Jio has spectrum across 800 megahertz, 1,800 megahertz and 2,300 megahertz bands, according to the latest financial presentation by its parent Reliance Industries. The year to March 2017 will be Jio’s first full year of commercial operations, it said.
Reliance Jio’s 4G service is expected to shake up a sector where as many as dozen operators fight for 996mn subscribers by slashing tariffs and crimping profit margins.
Idea Cellular announced last month that it was buying spectrum in two circles from Videocon Telecommunications for Rs33.1bn ($500mn) – the first such deal since the government allowed carriers to trade and share airwaves in August.
Bharti Airtel, India’s top wireless carrier, is spending Rs600bn over three years to improve its voice and data quality alongside exploring spectrum purchase deals from other operators. Vodafone Group’s Indian unit too is in the market if the pricing was right, its chief executive officer Sunil Sood had said on November 10.
Incumbents are bringing their capital spend timelines forward to counter Jio, a “potentially disruptive event” and offering price cuts across data and voice which will strain their cash flows, analysts at Barclays led by Sahil Kedia wrote in a November 10 note. “Jio is making the right moves, albeit slowly.”