Reliance Jio, RCom finalise third infra deal

The Rs 3,500-crore pact is expected to be announced early next week

Reliance Jio and Reliance Communications, telecom companies promoted by Mukesh and Anil Ambani, respectively, will share 70,000 km of intra-city fibre networks in a deal valued at Rs 3,000-3,500 crore.

The third infrastructure sharing agreement between the two companies is expected to be announced early next week.

Reliance Communications had last April agreed to share 120,000 km of its inter-city fibre network with Reliance Jio for a Rs 1,200-crore fee, marking rapprochement between the estranged brothers.

"The funds will come to Reliance Communications in about a month or two after the deal is announced early next week," said a source familiar with the development who did not want to be named. "The deal will be valid for about 15 years."

Reliance Communications declined to respond to on an email seeking further details about the deal. Reliance Jio did not respond.

In June 2010, Reliance Industries had bought spectrum from Infotel Broadband for $2.7 billion (Rs 12,848 crore) within hours of the company emerging as the sole winner in a government auction of airwaves for fourth-generation cellular services. Reliance Jio intends to launch operations this year, as it is obliged to offer services within five years of spectrum allocation.

The company plans to offer customers Wi-Fi devices the size of visiting cards as personal hotspots for high-speed internet access. Besides, it will provide small businesses with the technology to manage stores and inventory over cellphones. It also intends to launch mobile telephony services.

Reliance Jio announced its second agreement with Reliance Communications to share 45,000 telecom towers in a deal valued at Rs 12,000 crore. With next week's announcement, the total value of network shared between Reliance Communications and Reliance Jio could reach Rs 16,700 crore.

Last month, Reliance Jio announced an agreement with telecom infrastructure company Viom Networks to share 42,000 cell towers for an undisclosed value. The company has similar agreements with Bharti Infratel and Bharti Airtel.

RCom primary support

Reliance Jio is relying on companies such as Reliance Communications, Bharti Airtel and Viom Networks to roll out its services. Reliance Communications is likely to be the primary infrastructure provider and Bharti Airtel and Viom Networks will step in where it does not have tower or fibre capacity. "This also marks an era of debt-laden operators putting aside their rivalry to leverage their infrastructure," said the source.

Reliance Jio is also expected to sign agreements with Reliance Globalcom, now Global Cloud Exchange, and Tata Communications for submarine cable capacity.

RIL borrows $500 million

Reliance Industries has received a $500-million loan from Export Development Canada, a financier and insurer of exporting companies in the North American nation. Since 2010, RIL has been doing business with about 50 Canadian companies. (BS Reporter)

THE THREE DEALS

* April 2013 - Rs 1,200 crore; 120,000-km inter-city optical fibre cable (OFC) network

* June 2013 - Rs 12,000 crore; 45,000 telecom towers

* April 2014 - Rs 3,500 crore; 70,000-km intra-city OFC network