As many speculated, Mukesh Ambani contolled Reliance Jio Infocomm Infocomm( formerly Reliance Infotel Broadband) entered into an partnership with junior Anil Ambani headed Reliance Communications for using later's fiber optic usingnetwork and vice versa.
The Rs 1,200-crore would be one time indefeasible right to use (IRU) fees for sharing RCom’s nationwide inter-city fiber optic network infrastructure, the companies said in a statement.
The agreement permits Reliance Jio Infocomm to utilise multiple fibre pairs across RCom’s 1,20,000 km inter-city fiber optic network to provide 4G services. In turn, RCom will have reciprocal access to optic fibre infrastructure that Reliance Jio Infocomm would be building in the future.
The official statement from Rcom to Bombay Stock Exchange it hinted that there would be more partnerships between two companies.
The deal will give Jio a boost as Rcom has 1,20,000 km of optic fiber network, 1,90,000 km of ducted optic fiber cables, metro fiber networks in 44 cities connecting 1,134,000 homes. Reliance Jio is made out of the scratch and the deal will put the greenfield company a right direction as data is their main focus.
Upcoming deals between Jio & Rcom can be on various levels. Reliance Jio can go for Reliance Infratel's 58,000 towers across the country, most of these towers are OFC connected. Rcom owns Reliance Globalcom which has world's largest private undersea cable system worth 65,000km which can provide cheap international data to Jio. Not only that Mukesh can opt for Rcom's CDMA network for offering underlying 2G network for more coverage. Reliance Anil Dhirubhai Ambani Group (ADAG) has several subsidiaries - Reliance Entertainment, Mediaworks and Synergy which can provide media, internet and filmy contents.
Our Take:
The deal is just perfect for both pf Ambani brothers. Mukesh got his fiber optic network at best price while Rcom got its cash boost. Reliance Jio can now easily take on Bharti Airtel with Rcom's wide OFC coverage in the roll out of 4G. The deal also helps Jio to create its content ecosystem. We believe the deal is multi-faceted, and more such updates will go public as Reliance Jio prepares itself for great Indian dream.
