Bharti Airtel and Reliance Jio Infocomm (RJIL) have entered into a comprehensive telecom infrastructure sharing arrangement.
Under the deal, both companies will use each other’s infrastructure that includes optic fibre, submarine cable networks, towers and internet broadband services. The partnership could extend to 2G, 3G and 4G roaming services, the companies said.
While the deal size and details were not disclosed, Sunil Mittal-led Bharti and Mukesh Ambani-led RJIL said the partnership was aimed at avoiding duplication of infrastructure, preserving the environment and providing redundancy to improve quality of service.
The companies said the pricing would be at ‘arm’s length’, based on the prevailing market rates at the time of rollout or usage.
According to a source, “As per the deal, RJIL will rent 2,000 national towers from Bharti and use about 8,000 km of inter-city and intra-city optic fibre belonging to Bharti. This can be seen as a filler for the areas where Reliance Communications is not present – and not overlapping with RCom. This is in keeping with RJIL’s plan to have a pan-India 4G footprint.”
RJIL has a deal with Rcom for using latter’s fibre optic network for 4G services and towers.
Bharti Infratel, a subsidiary of Bharti, is one of the largest tower infrastructure providers in India with 35,376 towers in 11 telecom circles across India – most of them from Indus Towers, in which Bharti holds a 42% equity stake. In addition, Bharti’s national long distance network covers 175,705 km of optic fibre, while its global network runs across 225,000 km, covering 50 countries and five continents.
Ankita Somani, analyst with Angel Broking, said, “This deal, which is even bigger than the infra sharing Reliance Jio Infocomm has signed with Reliance Communications, is unprecedented. It will mean sharing of infrastructure for a whole range of telecom services and not just in one state but across the country. This deal is positive for Bharti Airtel as it will improve the utilisation rate of its assets and, in turn, will aid in improving the cash flows going ahead.”
RJIL, whose biggest drawback is its lack of an established subscriber base and voice network, can greatly benefit from using industry leader Bharti’s 2G and 3G voice network, besides its base of 194.88 million subscribers at the end of October 2013, as per COAI. Bharti is also the only 4G operator in India so far, so RJIL stands to gain from Bharti’s 4G launch experience as well. Sharing 4G infra could also help both in offering cheaper 4G services.
Hemant Joshi, partner, Deloitte Haskins & Sells, said, “This trend is nothing new. With tower sharing agreements, the sector in India has always innovated in business models. We are moving to an era of co-operation along with competition.” It is also believed that RJIL is looking at other non-telco partners for 4G infrastructure.
It is expected to launch 4G services in Delhi and Mumbai by the year-end, sources said.