Jio pays off $4 billion in spectrum dues and takes broadband crown

Reliance Jio is on a roll, paying off billions of dollars of spectrum liabilities just a day after official figures revealed it is now India’s biggest fixed broadband provider.

The Indian telco is keen to share that it has made payments totalling 307.9 billion rupees, or just over US$4 billion, to the Department of Telecom (DoT) to clear all its spectrum dues, including accrued interest. The payments pertain to the acquisition of a total of 585.3 MHz of frequencies acquired in auctions in 2014, 2015 and 2016, as well as through a trading deal with Bharti Airtel last year.

Jio was not obliged to make the full payment at this stage, but has done so to save itself some hefty interest charges. Monies for the spectrum were due in annual instalments through to the 2034-2035 financial year and carried interest rates of up to 10% per year. As such, Reliance Jio said it expects to make interest cost savings of around INR12 billion per year, or $161 million.

Whether it is also looking to show up rival player Vodafone Idea, which last week agreed to transfer one third of its equity to the state in return for deferring interest payments on spectrum and AGR dues, is another matter. The two announcements coming as close together as they did really serve to highlight the disparity in fortunes of the two companies though.

Speaking of which, new industry data shows that Jio has strengthened its position not only in India’s mobile segment – it is the number one player with a share of 36.1% of subscriptions as of the end of November – but also in fixed broadband, where it has now overtaken state-owned incumbent BSNL as the market leader.

The Telecom Regulatory Authority of India (TRAI) published its latest subscriptions data earlier this week. On 30 November Reliance Jio had 4.34 million fixed broadband customers, having added around 180,000 new customers during the month. BSNL, meanwhile, lost over half a million customers in November alone, reducing its base to 4.2 million and robbing it of its leadership position.

Third-placed Bharti Airtel, which was overtaken in the market by Jio in August, is still growing, albeit at a lower rate than its rival, and ended the month with 4.08 million fixed broadband accounts. There were 24.4 million fixed broadband accounts in total in India at the end of November, down slightly on the previous month.

In the overall Indian broadband market, which includes fixed and wireless services, Reliance Jio holds a commanding lead. Its 433 million subs, which give it a 54% market share, are more than double those of second-placed Bharti Airtel and three and a half times the number Vodafone Idea can claim.

Those figures alone clearly demonstrate the impact Jio has had on the Indian telecoms sector since it launched just five short years ago.