Bharti Airtel said it was selling spectrum worth around Rs 1,500 cr to Reliance Jio.
The sold spectrum is in the CDMA band (800 MHz). Jio is currently the only telecom player in India to use that band for delivering 4G services.
It is likely that Bharti Airtel got hold of that spectrum as part of its as part of its acquisition of Tata Teleservices, which used to provide mobile GSM and CDMA services across India.
The compensation of Rs 1,500 will come in the form of cash payment of Rs 1,038 cr by Jio to Airtel, and the assumption of debt (payment liabilities) of Rs 459 cr by Jio.
The payment liabilities are related to the acquired spectrum.
Airtel said the move is designed to unlock value from an underutilized asset.
CDMA services have been wound up across the country as companies reallocated the spectrum to 4G services.
Moreover, Tata Group also exited consumer-facing telecom business after sustaining losses year after year, despite making a tremendous impact on the market via its per-second billing plan.
The transferred spectrum comprise those in Andhra Pradesh (3.75 MHz), Delhi (1.25 MHz) and Mumbai (2.50 MHz).
The new spectrum will allow Reliance Jio to increase capacity in its band 5 LTE service that is primarily used to cater to VoLTE traffic, but also serve as a last-line option to deliver internet connectivity inside hard-to-penetrate zones, such as inside thick concrete jungles.
Airtel has focused its 4G services on higher bands such as band 3, 1 and 40 and had little interest in launching band 5 services in these circles alone.