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It's Bhai-bhai For Ambanis In Telecom

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The Ambani brothers —  Mukesh and Anil — seem to have begun the process to settle their differences, at least in telecom. In the second deal in as many months, Mukesh Ambani-owned Reliance Jio Infocomm (RJI) has agreed to use 45,000 telecom towers of Anil Ambani-owned Reliance Communications (R-Comm) in a Rs 12,000-crore deal. Last time round, RJI had tied up with RCom in the Rs 1,200 crore deal for sharing inter-city optic fibre connectivity.

There are enough reasons why this deal is important to both brothers.

Read Also: RJIL, RComm Sign Telecom Tower Deal
 
Suddenly, the business case for R-Comm has become all that better. The deal will help Anil Ambani retire some of the accumulated net debt of Rs 38,864 crore that R-Comm is saddled with. It will also provide a regular, clear fixed source of income for R-Comm that has seen net profit in FY 2013 fall 28 per cent to Rs 671.6 crore on revenues of Rs 21,778 crore.

For Mukesh, it will help in a faster roll-out of broadband wireless access services. More importantly, three years after winning 20MHz of 2300MHz spectrum nation-wide, RJI has yet to launch services anywhere in the country. Meanwhile, Bharti Airtel which won BWA spectrum in 8 circles (including four that it acquired from Qualcomm later) has already launched services in Kolkata, Bangalore, Pune and Mohali. Another advantage that Mukesh has is that it was after all he who built that network before the brothers split.

But one thing is clear, after going through tough times for well over a year the telecom sector is finally looking to get going all over again.