The Telegraph
Tuesday , April 8 , 2014
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Ambani duo ink third deal in telecom

Mumbai, April 7: Reliance Industries’ telecom arm has agreed to use Reliance Communication Ltd’s intra-city fibre network to roll out 4G services, marking the third infrastructure sharing agreement between brothers Mukesh and Anil Ambani.

Reliance Communications, controlled by Anil Ambani, may earn as much as Rs 5,000 crore from leasing out its fibre optic network.

Reliance Jio Infocomm Ltd, the telecommunications unit of Mukesh Ambani-run RIL, has signed a master services agreement with R-Com based on “arm’s length pricing at prevailing market prices”, the two companies said in separate statements.

Reliance Jio is the only company to have a nationwide 4G licence and is looking to start commercial services by the end of the year.

It had in April last year signed a Rs 1,200-crore deal to hire R-Com’s inter-city fibre for its 4G network. In August 2013, it signed a $2.1 billion pact for leasing R-Com’s mobile phone towers.

According to the master services agreement signed today, Reliance Jio will utilise R-Com’s nationwide intra-city fibre network for accelerated rollout of its 4G services across the country.

“R-Com’s intra-city optic fibre network extends to nearly 500,000 fibre pair kilometres, across 300 cities and towns in India,” the statements said.

A source said fibre pairs per kilometre could cost as much as Rs 3-3.5 lakh in large cities such as Delhi and Mumbai and they could be in the region of Rs 40,000-50,000 per kilometre of fibre pairs in smaller cities such as Patna, Rourkela and Jammu. The national average, therefore, comes to around Rs 1 lakh per kilometre of fibre pairs.

Since R-Com has around 500,000 kilometres of intra-city fibre pairs nationally, the overall deal size for intra-city fibre deal with Reliance Jio Infocomm is potentially around Rs 5,000 crore.

This will be spread over the lifetime of the deal, which, typically, is around 15 years, the source said.

“This third agreement further strengthens the comprehensive framework of business co-operation between Reliance Jio Infocomm and Reliance Communications, following the inter-city optic fibre sharing agreement signed in April 2013, and the nationwide telecom tower infrastructure sharing agreement signed in August 2013,” the statements said.