Reliance Jio, RCom eye more pacts

Jio to use RCom's retail network to market its products

Mukesh Ambani’s telecom venture Reliance Jio Infocomm is in talks with the Anil Ambani-led Reliance Communications (RCom) to share the latter’s comprehensive retail network across the country.

While announcing its third pact on Monday in which RCom will share its intra-city optic fibre backbone with Jio, a wholly owned subsidiary of Reliance Industries (RIL), the company said it is looking at many other areas of partnership. This deal could earn RCom as much as Rs 5,000 crore spread over the entire life of the cable, which could be around 15 years. According to sources, the talks are centred around Reliance Jio sharing RCom’s retail network so that Jio can use RCom’s consumer touch points to market its products as well as collect bills.

“There are so many areas which could be explored. Reliance Industries does not have a huge consumer-reach like Reliance Communications or other group companies like Reliance Infrastructure,” said an official from Reliance Communications. Reliance Infrastructure distributes electricity in Delhi and Mumbai. RCom has 3,000 stores across the country and is also present across 600,000 multi-brand outlets.

RCom, which also has a data centre facility at its Navi Mumbai campus, which it can leverage for Reliance Jio. “They (Jio) will need someone to manage their data centre and also there are more areas like customer care,” said the company official.

Analysts believe both the companies can look at their collective approach to get and clinch better deals. “They can jointly bid for future infrastructure procurement or jointly bid for handsets to get an attractive price,” said Mahantesh Marilinga, senior telecom analyst at Finquest.

RCom is already eyeing device play to market its third generation data services with their Zero Bill plan. Apart from the latest Apple iPhone 5 series, the operator is eyeing a variety of devices to make custom-made bill plans.

The three deals signed by Jio with RCom until now are related to infrastructure where the former will share the latter’s cable network within cities.

“Reliance Jio Infocomm will utilise RCom’s nationwide intra-city fibre network for accelerated roll-out of its state-of-the-art 4G services across the country. The agreement is based on arm’s length pricing at prevailing market prices. RCOM’s intra-city optic fiber network extends to nearly 500,000 fibre pair kilometres, across the top more than 300 cities and towns in India,” said Jio, in a press release.  Jio is looking to offer services such as high-definition TV on the Internet as well as cloud-based healthcare services and storage services, among others.

RIL signed pacts on inter-city and intra-city optic fibre sharing, as well as telecom towers of Reliance Communications. Reliance Jio is still gearing up to launch its 4G-based high-speed data services, which is expected this year. However, Jio has time till 2015 to launch its services, according to the licence conditions of the Wimax spectrum, which was won in 2010.
EXPANDING HORIZONS

• The deal could earn RCom as much as Rs 5,000 crore spread over the entire life of the cable, which could be around 15 years
• RCom has 3,000 stores across the country and is present across 600,000 multi-brand outlets
• The three deals signed by Jio with RCom until now are related to infrastructure where the former will share the latter’s cable network within cities