Wednesday, April 10, 2013

Reliance Industries strikes another deal with Reliance Communications

INDIA: In yet another breakthrough to launch its high speed and voice services over fourth generation (4G) telecom networks - Reliance Industries Ltd (RIL) hired 32,000 towers from Reliance Communications' (Rcomm) kitty of 45,000 towers.

Mukesh Ambani led RIL is setting up the basic infrastructure for Reliance Jio Infocomm - the 4G arm of the country's biggest private sector company. This deal is set to get the final nod in this month. Reliance Jio Infocomm will supposedly sign an agreement to lease the 32,000 towers on an annual rent of Rs 1,000-1,200 crore.

Reliance Infratel - the subsidiary arm of RComm was looking for a perspective deal since 2010, as the towers are over capacitated. Prior to this deal, RComm was considering selling its stake in tower business to stakeholders spread across the globe. Also, in 2010, it was in talks with GTL Infrastructure to merge their tower business, but the deal did not see the light of the day.

Earlier this month, RIL has signed a deal with RComm on using the latter's fibre-optic cable network spread in 1.2 lakh kilometers across the country. As a part of this deal, Reliance would have to pay Rs 1,200 crore once the fibre optic network is customized to work in tandem with Jio Infocomm.

Apart from depending on this fibre-optic network solely, Reliance is also planning to come up with its own fibre-optic network that will be used by RComm vice-versa. Starting the infrastructure from scratch for 4G services was delaying the launch of 4G services in India. So it was a wise move by Mukesh Ambani to spearhead the fibre-optic deal between RIL and RComm

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