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BW Businessworld

RIL, RComm Sign Rs 12,000-Cr Tower Pact

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Billionaire Ambani brothers on Friday, 7 June '2013 announced a Rs 12,000-crore deal, wherein Mukesh will use towers owned by a firm run by his younger sibling Anil for launch of his telecom venture.
Reliance Industries Ltd's telecom arm will lease up to 45,000 mobile masts from Reliance Communications Ltd in a deal valued at more than Rs 12,000 crore over the lifetime of the contract, the two groups announced on Friday. The agreement provides for joint working arrangements to configure the scope of additional towers to be built at new locations for seamless delivery of next generation services.
The second deal between the brothers in as many months will give an estimated Rs 800 crore per annum additional revenue to Anil's Reliance Communications if the deal tenure is 15 years.
"Under the terms of the agreement, Reliance Jio Infocomm will utilise up to 45,000 ground and rooftop based towers across RCom's nationwide network for accelerated roll-out of its state-of-the-art 4G services," the two groups said in separate but identical statements.
Reliance Jio Infocomm is the only company which had in 2010 won a pan-India spectrum for 4G services but is yet to start commercial services.
The deal is a boost for Reliance Communications, India's third-biggest cellular carrier by customers but profits have been under pressure, mainly due to its heavy debt burden. "This is going to be a positive for Reliance Communications as it opens a new source of revenue for them," said K.K. Mital, head of portfolio management at Globe Capital Market.
"It's also good for Reliance Jio because they are getting ready infrastructure and the big benefit is there is no upfront investment in building infrastructure."
The tower deal comes after an agreement in April to lease Reliance Communications' optic fiber network to Reliance Jio, in what was the first business tie-up between the two billionaire brothers since ending a long-running feud. 
Dhirubhai Ambani's death in 2002 led to a power struggle between his two sons that split the Reliance empire. Mukesh ended up with the core energy business, and Anil ended up with the telecoms, financial services and power businesses. 
The agreement announced on Friday (7 June) 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," the statements said.
RILChairman Mukesh Ambani had earlier on 6 June announced Reliance Industries will invest Rs 1.5 lakh crore across energy, petrochem and telecom businesses over the next three years. Ambani told shareholders at the company's annual general meeting that he had a bullish view of the potential for digital services in India, and the unit would more than triple its headcount to 10,000 over next year, but did not say when services will be launched. "Reliance Jio has finalised key vendors and suppliers required for the initial launch of the services," he said.
This pact follows the inter-city optic fibre sharing agreement already signed in April 2013 as part of a comprehensive framework of business co-operation between Reliance Jio Infocomm and Reliance Communications, it added.
Shares of RComm were trading 0.47 per cent lower at Rs 117.50, while RIL was quoting 0.82 per cent higher at Rs 798.80 on the BSE in late morning trade. 
Reliance Jio has also signed a pact with Indian mobile market leader Bharti Airtel for leasing international bandwidth. It has also joined a consortium of telecom companies building a submarine cable system to link Malaysia and Singapore with the Middle East.