Vodafone, Reliance Communications Reportedly Planning 2G Roaming Agreements

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

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

The two companies are also in advanced talks to share 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 intra-circle roaming agreements where RCom's 3G customer will be able to fall back on Vodafone's 2G network in five service areas. The deal is expected to be finalised within a week," sources in the know told PTI.

When contacted, Vodafone India spokesperson said: "We are not commenting on this at the moment."

RCom spokesperson, too, declined to comment. Though the 3G and 2G customer break-up is not known in these areas, RCom has had a strong network penetration in these service areas, especially in Bihar.

Vodafone network covers 1,400 towns and about 130,000 villages in these five service areas, one of the sources said. The agreement is similar to 3G-ICR, under which 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 900MHz 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 470,000 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 the lowest debt among Indian telecom operators while Vodafone will lower its operational expenses," another source said.

The company has been looking to lower the cost of ownership and monetise the assets to lower debt. On December 4, the Anil Ambani-led firm had said it had 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 crores 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 percent.

RCom is also finalising a spectrum-sharing deal with Reliance Jio for its 800MHz 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.