Telecom Lead Asia: Mukesh Ambani-promoted Reliance Jio Infocomm has signed a Rs 1,200 crore network sharing deal with Reliance Communications, which is owned by Anil Ambani, for rolling out 4G services.
The deal does not include any equity infusion.
As per the long-term agreement, Reliance Communications, which is trying to prune its debt, will benefit from approximately Rs 1,200 crore as one time indefeasible right to use (IRU) fees for sharing its inter-city fiber optic network infrastructure.
Reliance Jio Infocomm, which is in the process of launching 4G in key cities across India, will utilize multiple fiber pairs across Reliance Communications’ 1,20,000 kilometres inter-city fiber optic network to provide backbone for rolling out its 4G / LTE services.
Reliance Communications does not have permits to launch 4G / LTE services in India. Reliance Jio Infocomm’s 4G will be a rival to Reliance Communications as the Anil Ambani’s telecom venture is trying to emerge as a strong mobile data provider in India. It offers both EVDO and 3G services to its customers.
The deal is significant for Reliance Jio Infocomm which has got the broadband wireless spectrum (BWA) in 2010. Since Reliance Jio Infocomm does not have the telecom backbone in place, relying on Reliance Comm will assist the 4G operator to offer services cost effectively.
Reliance Jio Infocomm — with an investment plan of around $10 billion — will be offering both voice and data services on its 4G network competing with integrated players such as Bharti Airtel, Vodafone, Idea Cellular, etc.
Reliance Communications will in turn have reciprocal access to optic fiber infrastructure to be built by Reliance Jio Infocomm in the future.
Both companies will make joint working arrangements for upgrading the optic fiber network, to ensure seamless delivery of next generation services.
Both Reliance Jio Infocomm and Reliance Communications believe that the agreement will ensure optimal utilization of the existing and future infrastructure of both companies on reciprocal basis, including inter alia, inter-city fiber, intra-city fiber, towers and related assets.
At present, Reliance Communications covers over 24,000 towns and 600,000 villages.
This apart, Reliance Communications owns and operates the world’s largest next generation IP enabled connectivity infrastructure, comprising over 277,000 kilometers of fibre optic cable systems in India, USA, Europe, Middle East and the Asia Pacific region.
