RIL, Bharti forge deal to share telecom infra

Pricing of services to be on ‘arms len­gth’ basis

RIL, Bharti forge deal to share telecom infra
The much-expected ch-urn and consolidation has begun in the telecom services industry with Bharti Airtel and Reliance Jio announcing a tie-up in telecom infrastructure across geographies and service platforms.

The two firms headed by Sunil Bharti Mittal and Mukesh Ambani, respectively, have also hinted at extending the tie-up to the rollout of 2G, 3G and 4G services.

To begin with, the two companies will utilise each other’s intra and inter-city optic fibre networks and submarine cable networks, towers and internet broadband services.

The tie-up will ensure that there’s no duplication in infrastructure and quality is improved. A Bharti Airtel statement said that both the companies would jointly identify opportunities in future to share telecom infrastructure. The tie-up will also include jointly laying of the optic fibre network. Bharti said the pricing of all infrastructure services wo­uld be based on ‘arms len­gth’ basis at market rates.

Bharti and Reliance Jio already have an agreement under which the former provides capacity on its i2i submarine cable to the latter. The latest partnership between two large business families has also come on back of such infrastructure sharing announced a few days back in Punjab to enhance users’ experience of 4G services.

The tie-up follows a November 19 decision of Reliance Industries (RIL) board to prioritise telecom and petrochemicals investments over traditional areas like oil and gas exploration and development.

The tie-up comes after the Union cabinet recently approved merger and acquisition norms to pave the way for consolidation in the fractured telecom services industry. The biggest challenge identified by RIL with 2300 mhz spectrum in hand to quickly roll out 4G services was the non-availability of telecom towers and 4G compliant cost- effective handsets.

While RIL will need over 10,000 towers in Mumbai and Delhi alone, it has assured coverage through 3,000 sites that Reliance Communications of the Anil Ambani group has. Similar challenges are also faced by the only other 4G operator, Bharti, with whom RIL has now entered into an infrastructure deal.

RIL has already forked out $2.7 billion for 2300 mhz spectrum and may have to invest another $7.7 billion on airwaves. Network investment and branding will need $1 billion each. Plus there are other expenses.

Bharti Infratel, a subsidiary of Bharti, has 35,376 towers in 11 telecom circles across India. Besides, Bharti Infratel has 42 per cent stake in Indus Towers that has 112,144 towers in 15 telecom circles. Bharti will share with Reliance Jio its national long-distance optic fibre network of 175,705 km. It has a global network of 2,25,000 km in 50 countries in five continents.

On the other hand, Reliance Jio has broadband wireless access (BWA) spectrum in 22 circles and is in process of setting up pan-India telecom infrastructure. Reliance Jio is part of the ‘Bay of Bengal gateway’ cable system that will provide connectivity between South East Asia, South Asia and West Asia, Europe, Africa and the Far East through inter-connections with other existing and new cable systems landing in India, West Asia and the Far East.

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