Ambani brothers’ Reliance firms sign USD220m fibre sharing deal

3 Apr 2013

Reliance Jio Infocomm has signed an INR12 billion (USD220.5 million) deal with Reliance Communications (RCOM) to utilise the latter’s fibre-optic backbone network, the Indian Express reports. Under the terms of the deal, Jio Infocomm will utilise RCOM’s 120,000km fibre-optic network to provide the backbone for its 4G network. RCOM will also gain reciprocal access to fibre-optic infrastructure installed by Jio Infocomm. A statement from the two firms noted that: ‘The agreement provides for joint working arrangements to be put in place immediately for ‘upgradation’ of the optical fibre network, to ensure seamless delivery of next generation services.’

Jio Infocomm is the telecommunications arm of Reliance Industries, created in 2005 via the division of Reliance Group between the two Ambani brothers, which saw Anil Ambani’s RCOM take control of the group’s telecoms, electricity and financial services whilst Mukesh Ambani’s Reliance Industries represented the group’s petrochemical assets. Reliance Industries re-entered the telecoms market in 2010 with the acquisition of pan-India 4G spectrum.

The infrastructure sharing deal represents the first cooperation between the two since the division of the Reliance empire, and is the first of an intended framework of business cooperation between Jio Infocomm and RCOM for optimal utilisation of the infrastructure of the two companies including inter- and intra-city fibre, towers and related assets. In the wake of the announcement, RCOM shares increased by 17% before closing 11% higher than the previous day, whilst Industries’ stocks closed 2% higher.

India, Infotel Broadband (Reliance Industries - RIL), Reliance Communications (RCOM)