Ambani brothers in new deal, this time for telecom towers

Mumbai, June 7 (IANS) The two telecom ventures headed by the Ambani brothers, Mukesh and Anil, Friday announced yet another accord — this time to share the nation-wide telecom towers infrastructure of Reliance Communications.

The aggregate value is at over Rs.12,000 crore (more that $2 billion) during the lifetime of the deal, the companies said.

“Under the terms of the agreement, Reliance Jio Infocomm will utilise up to 45,000 ground and rooftop-based towers across Reliance Communication’s nationwide network for accelerated roll-out of its state-of-the-art 4G services,” the two groups said in separate but identical statements.

“The agreement provides for joint working arrangements to configure the scope of additional towers to be built at new locations to ensure deep penetration and seamless delivery of next generation services.”

Experts view the deal as mutually beneficial for the two companies.

“This deal will help both companies,” said Mahesh Uppal, chief executive officer of consultancy Com First.

“Reliance Communications will derive substantial additional revenues by leasing out its infrastructure to Reliance Jio, which is rolling out nationwide wireless infrastructure. Reliance Jio can benefit from substantial savings in costs and time,” Uppal told IANS.

Rishi Tejpal, principal research analyst, CSP Business Strategy, Gartner Technology & Service Provider Research, said this was very much expected.

“Considering that Reliance Jio Infocomm is trying to position themselves as nationwide providers of next generation telecom services, they have to go the infrastructure sharing way,” Tejpal said.

“It is the best way to quickly spread nationwide and provide seamless coverage. Going in for infrastructure sharing deals like this is the most cost-effective and less time consuming process. We can expect some more similar network infrastructure sharing deals in the future.”

The accord follows the inter-city optic fiber sharing agreement already signed in April as part of a comprehensive framework of business co-operation between Mukesh Ambani-led Reliance Jio Infocomm and Anil Ambani-led Reliance Communications.

The $220-million agreement was seen as helping Reliance Jio Infocomm to accelerate the roll-out of fourth generation (4G) telecom services.

“The 4G eco-system is still not sufficiently mature and therefore any hasty decision, especially if it is about expensive infrastructure or technology can be risky. So, understandably Reliance Jio as well as other 4G players are treading with caution,” Uppal said.

Reliance Group of Anil Ambani last month said a consortium led by Samena Capital was in last stages of due diligence to buy into its global communications arm Reliance Globalcom – a deal, which market sources said, could value the company at $1-1.2 billion.

Reliance Communications has a customer base of over 130 million, including more than 2.5 million individual overseas retail customers. The company’s corporate clientele includes 35,000 Indian and multinational corporations, and over 800 global, regional and domestic carriers.

Reliance Jio has broadband wireless spectrum in 22 out of 23 telecom circles in India, capable of offering 4G services. The pact with Reliance Communications is expected to help it offer services soon.

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