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Reliance Jio, RCom sign Rs 5,000 crore intra-city fibre deal

Tuesday, 8 April 2014 - 9:30am IST | Place: Mumbai | Agency: dna

Total triple transactions signed between both brothers equals Rs 18,200 crore. Tie-up with RJIL Gives Rcom second largest industry tower ratio of 2.7x. Deal to be closed in time for RJIL's official 4G launch this September

Mukesh Ambani-controlled Reliance Jio Infocomm Ltd (RJIL), the 4G arm of Reliance Industries, has inked its third telecom infrastructure deal with Anil Ambani-led Reliance Communications for 500,000 kms of intra-city fibre across 300 cities and towns in India.

The deal valued at Rs 5,000 crore has been in the pipeline since April last year, which translates into an average of Rs 1 lakh per km of optic fibre for a period of approximately 15 years, according to sources requesting anonymity. In 2013, RJIL had struck its first inter-city sharing deal with RCom for 120,000 kms of optic fibre valued at Rs 1,200 crore.

Subsequently, RJIL signed a deal with Rcom for access to 45,000 towers in a deal worth Rs 12,000 crore in August.

Following the latest arrangement, the total deal value of transactions between RJIL and RCom stands at Rs 18,200 crore.

As per a company statement, "This 3rd agreement further strengthens the comprehensive framework of business co-operation between Reliance Jio Infocomm and Reliance Communications. The agreement is based on arm's length pricing at prevailing market prices."

The reciprocal deal – which allows both parties access to each others infrastructure, towers and network - is expected to close just in time for RJIL's planned Diwali launch in September.

As per the source, 80% of fibre – both intra-city and inter-city has already been handed over by RCom to RJIL, which has been tested at various points of the country during the course of the last year – like Ahmedabad, Pune, Gujarat, Delhi, Mumbai and Chennai.

Another industry expert, who did not wish to be named said that the RJIL-RCom deal makes Rcom the second largest tower tenancy holder in India with an average ratio of 2.7x, next to Viom Networks – with industry's highest tenancy ratio of 2.8x. It is even higher than Indus Towers – India's largest tower company, which has a tenancy ratio of around 2x.

Apart from these three deals with RCom, RJIL has additionally signed an infrastructure sharing deal for fibre and networks with Bharti Infratel and a tower sharing deal with Viom Networks.

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