Corporate kinship with brother to lift Mukesh's RIL by Rs 12,000 cr

Cost of fibre optic network and telecom towers would be saved for RIL

The infrastructure-sharing deal between Mukesh Ambani's Reliance Industries Limited (RIL) and Anil Ambani-led Reliance Communications (RCom) has turned out to be a bonanza for RIL - it has managed to save about Rs 12,000 crore it would have needed to set up a network of fibre optic and telecom towers in the country, say RIL sources.

According to the agreement between the two companies, RCom would receive Rs 1,200 crore as a one-time indefeasible right-of-use fee.

RIL sources the deal has helped the company save substantial roll-out time, apart from saving a huge investment for Reliance Jio, RIL's telecom arm.

The company urging its consent should be taken in case a new tenant company comes on board after the deal with RCom, say RIL insiders.

This would help RIL keep rivals out. Sources say talks on telecom-tower sharing are underway and an announcement is expected "very soon".

An RCom spokesperson said the deal didn't include any exclusivity and RCom was free to offer its fibre optic to any third-party, without RIL's consent. He didn't reply to a mail on the towers deal.

An RIL spokesperson didn't reply to an email seeking comment.

RIL sources say the group has planned an investment of Rs 13,500 crore on telecom services in the next five years. With the crucial infrastructure secured, launching its telecom products by the end of the year would be relatively easy.

This financial year, RIL would spend Rs 2,700 crore in telecom services roll-out.

Before launching services, the company is testing signals in key cities.

Analysts say for RCom, the deal is negative, considering a major player such as RIL, which has deep pockets, entering the market.

"If Reliance Jio goes full-fledged into the voice market, it would be a further negative, owing to greater competitive intensity. Regulatory risk remains an issue with the sector," says an analyst with Nirmal Bang Securities.

Earlier, RIL had made an application to the Centre to offer voice telephony, which would pitch the company directly against RCom.

Analysts say RCom's high debt would be a drag for the company and hit its ability to face increased competition from RIL, which is preparing to offer free voice telephony as a package with its data business.

On Friday, the RCom stock closed at Rs 63 on the Bombay Stock Exchange, compared with Rs 54 on Monday, while RIL closed at Rs 780.35 a share, against 778.15 on Monday.