With Mukesh Ambani’s Reliance Industries Ltd (RIL) taking the first big steps in striking deals on the technology and tower fronts, its fourth-generation (4G) long-term evolution (LTE) services are expected to be launched between June and August, at least in Mumbai, Delhi and Jamnagar to begin with.
Vendors in discussions with the company say they have been given this time frame as a deadline. They also say RIL-owned Infotel Broadband, which won broadband wireless spectrum for 4G services, is close to signing a deal by February-end with Reliance Infratel, the company promoted by the Anil Ambani group, entailing leasing out its towers across the country. Reliance Infratel has over 50,000 towers, a majority of which are linked with a fibre-optic backbone, crucial to make high-speed data transfer possible.
The deal makes sense for RIL. Most of the other infrastructure companies have towers without a fibre-optic backbone and communicate through microwave links. Tower companies say 30,000-35,000 towers, that is one in 10, would have a fibre optic backbone. Most of these, they say, are with Reliance Infratel, part of the Anil Ambani group.
“For high movement of data, you need towers connected through a fibre optic backbone. Mukesh (Ambani), earlier instrumental in building this infrastructure before the company was given to younger brother Anil, is aware of where the fibre is available. Digging this kind of fibre from scratch, especially when right of way is becoming difficult, would take a lot of time,” says the chief executive of a leading tower company.
However, vendors dealing with RIL say the deal will not entail any equity buy in Reliance Infratel, at least for now. RIL did not respond to queries from Business Standard.
These sources also say Korean major Samsung was the first to have been selected to provide telecom gear, which might be bundled with 4G devices. Samsung declined to comment on the issue. The South Korean giant, new to the network equipment business, has made an audacious announcement that it wants to be among the top three telecom equipment manufacturers of the world. Samsung has recently won a contract with UK-based three (owned by Hutchison Whampoa) for network deployment for 4G LTE, as well as with Sprint in the US.
RIL has also talked to Huawei, Nokia Siemens and Ericcsson for supply of networks. Meanwhile, Reliance Communication’s (RCom’s) Chief Executive Officer Gurdeep Singh had, during an investors’ call last Thursday, said the company was in talks with three telecom operators for tower leasing.
The tower leasing deal would help RCom improve it rental income from towers, at a time when it lost some tenants after a few operators closed shop.
RIL had no infrastructure support, unlike its formidable rival, Bharti Airtel. The latter had already launched its high-speed data services, mimicking 4G speeds, via broadband wireless access spectrum. “It would make a huge difference. One needs a lot of capex to set up towers and infrastructure around it,” said Ankita Somani, research analyst, Angel Broking. She added it was a huge positive move for RCom immediately, though the long-term impact of this deal on RIL is yet to be seen.
Those in the know had said Infotel Broadband was likely to source Samsung’s SmartMBS multi-standard base stations, along with LTE base stations.