Bharti Airtel on Tuesday extended its infrastructure sharing pact with Reliance Jio Infocomm by signing a tower sharing pact with the latter.
The deal gives RJIL unlimited access to Bharti's towers to roll out its 4G services across the country at an 'arm's length,' based on market rates.
While details were not revealed, a source requesting anonymity pegged the tower rentals by RJIL from Bharti Infratel to be in the range of 25,000 of Bharti's total tower footprint of 35,000 towers. Besides, Bharti Infratel also owns a 42% stake in Indus Towers, which gives Reliance Jio access to about 82,000 towers across 22 telecom circles.
RJIL's tower rollout from Bharti Infratel is likely to be completed by the year-end in Tier-I cities, although 4G services are likely to be rolled out by June, the source said.
Sanjay Mashruwala, managing director, Reliance Jio, said, "This agreement is in line with our earlier comprehensive telecom infrastructure sharing arrangement with Bharti Airtel Ltd aimed at avoiding duplication of infrastructure, wherever possible, and to preserve capital and the environment. The agreement will help us with the faster roll out of our services across the country."
This is the first concrete announcement by RJIL, after it won spectrum in 14 circles in the 1800 MHz band in key telecom circles. RJIL intends to use the acquired 1800 MHz spectrum in conjunction with its existing pan-India BWA spectrum to roll out 4G services on both the FDD-LTE and TDD-LTE 4G bands.
It is believed that RJIL will use a mix of towers from Reliance Infratel, Bharti Infratel and Indus Towers. However, while Reliance's towers were sold at a 40-50% discount to prevailing market rates to RJIL, it is believed that Bharti Infratel's and Indus's towers will come at the current market price for RJIL.
Harit Shah of broking firm Nirmal Bang Securities, "This announcement for tower sharing means the in-principle deal signed between the two companies in December will finally start being monetised now, resulting in concrete revenue flow to Bharti."
Ankita Somani, analyst with Angel Broking, said, "We believe that this deal is positive for Bharti Airtel as it will improve the utilisation rate of the assets owned by it and, in turn, will aid in improving the cash flows."
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