RCom bags Rs 10,000-cr telecom infra deal

Allianz Infratech, wholly-owned unit of Etisalat DB, will outsource its telecom infrastructure requirements to RCom.

Integrated telecom major Reliance Communications (RCom) has bagged a Rs 10,000-crore ($2.2-billion) telecom infrastructure outsourcing deal from new entrant Etisalat DB Telecom (formerly Swan Telecom). The deal, which includes both towers and transmission, is spread over a 10-year period.

Etisalat DB will outsource both its passive (towers) and active (electronics and equipment) infrastructure across 15 circles to Reliance Infratel. Allianz Infratech, a wholly-owned subsidiary of Etisalat DB, will outsource its telecom infrastructure requirements to Reliance Communications (RCom), the companies said in a statement today.
 

TOWERING TALE

The scope of the contract could be extended to providing services like

* Last-mile connectivity for E1 connections (a higher bandwidth telecom connection)

* Supplying of bulk bandwidth

* Co-location services and providing of National Long Distance (NLD)

* International Long Distance (ILD) services

The companies intend to share a total of over 30,000 towers under the contract. Etisalat DB and its subsidiary — Allianz Infratech (which holds licences for Madhya Pradesh and Bihar circles) — would commence operations by the end of this year.

“As a new entrant in this dynamic market, this alliance provides us with key strategic advantages that will ensure a robust, speed-to-market and cost-effective rollout of services. Strategic alliances are integral part of our plans for growth and Etisalat Group will always be receptive to such alliances, which help enhance the customer experience,” Etisalat Chairman Mohammad Hassan Omran said.

Speaking to Business Standard, Reliance Infratel (RCom’s infrastructure subsidiary) President Inder Bajaj said: “This agreement presents large-cost optimisation benefits for Etisalat DB with an asset-light model. This ensures that Etisalat can ensure faster roll-out, optimise costs and save on time to market activities.”

The scope of the contract could be extended to providing services like last-mile connectivity for E1 connections (a higher bandwidth telecom connection), supplying of bulk bandwidth, co-location services and providing of National Long Distance (NLD) and International Long Distance (ILD) services, he added.

An Etisalat DB spokesperson said the value of this agreement (Rs 10,000 crore) is lower than the prevailing market rates and the discounts are commensurate with the volume of the deal.

Earlier, Norway-based Telenor, which holds a 60 per cent stake in Unitech Wireless, signed an infrastructure-sharing pact with Quippo Telecom Infrastructure. Other companies like state-run Mahanagar Telephone Nigam Ltd (MTNL), Bharat Sanchar Nigam Ltd, Idea Cellular and Vodafone-Essar were also looking at similar infrastructure sharing agreements.

Telecom companies were looking at separating towers and moving their business to a different company, which would enable these companies to become asset-light and concentrate on roll-out plans.

In 2007, Bharti Airtel had hived off its towers into a separate subsidiary, while Bharti Airtel, Vodafone-Essar and Idea Cellular jointly hived off a total of 70,000 towers into a separate company, Indus Towers.