Advertisement


Advertisement

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Breaking News : Reliance Jio, Bharti Airtel ink unprecedented pact for sharing telecom infrastructure
Advertisement
#1
Bharti Airtel, India's largest telecom company by market cap and revenues, has entered into an infrastructure-sharing deal with the telecom arm of Reliance Industries, creating a somewhat unlikely alliance between two groups usually perceived to be bitter rivals.

The deal will give the telecom unit, Reliance Jio, pan-India access to Bharti's nationwide infrastructure while giving Bharti access to the optic fibre capacity created by Jio in future. Consequently, RIL might be able to launch telecom and broadband services in the near future riding on Bharti's infrastructure, much earlier than if it had to build its own infrastructure. "It has cut Reliance Jio's time to market by several years," an industry official said.


Airtel, for its part, will see its cash flows boosted by lease rentals from Jio. "The sharing could extend to roaming on 2G, 3G and 4G, and any other mutually benefiting areas relating to telecommunication", both the companies said in a statement, reflecting the expansive contours of the deal between the two.

Pricing to be at an Arm's Length

The statement added that the scope of the partnership also extended to jointly laying optic fibre and rolling out other forms of infrastructure services.

The companies said that pricing would be at an arm's length, based on the prevailing market price. This is the second infrastructure-sharing arrangement between the two. In April this year, the two had signed an agreement under which Bharti has provided capacity on its i2i submarine cable to Reliance Jio.

The latest deal, some experts say, potentially overshadows Reliance Jio's infrastructure-sharing deal with Reliance Communications, announced in June 2013, which included sharing of optic fibre and access to 45,000 towers.

The announcement comes a day after RIL Chairman Mukesh Ambani called for a collaborative partnership with Sunil Mittal, the chairman of Bharti Enterprises, widely perceived to be his arch rival in the telecom arena. Ambani was speaking at the Progressive Punjab Summit on Monday.

"It is a win-win situation for both the companies as they have come together to synergise. While Reliance Jio's time to market has been cut down incredibly, Bharti will be able to sweat out its assets and earn significant rentals in leasing infrastructure to Reliance," said Prashant Singhal of EY.

Both the companies said the primary reason for joining hands was to cut the duplication of infrastructure wherever possible and to preserve capital and the environment. "We are moving to an era of cooperation along with competition," said Hemant Joshi of Deloitte Haskins & Sells, on the coming together to two arch rivals.

In terms of assets, Bharti's tower arm Bharti Infratel has over 35,000 towers across 11 telecom circles. It also has a 42% equity interest in Indus Towers, a joint venture with Vodafone and Idea and India's largest tower company with over 1.1 lakh towers in 15 telecom circles. Bharti also has a nationwide longdistance network and is part of a global submarine network covering 50 countries.

Industry experts feel the deal would have far-reaching ramifications for the telecom sector which is widely expected to see significant consolidation now the government has liberalised the M&A norms for the sector.

Deal better for Jio?

Some industry officials say the gains for Reliance Jio appeared to be larger as it would be able launch telecom services on the back of Bharti's infrastructure while Bharti's only gain would be revenues from lease rentals. "The deal mostly seems to benefit Jio.

Gains to Bharti need to be evaluated. The firm is giving its entire advantage away," said an industry expert who didn't wish to be named. While Bharti stands to earn hefty rentals form Jio, thus boosting its cash flows, industry experts say the gain from Reliance Jio's optic fibre capacity expansion will be realised only in future.


Attached Files Image(s)
   
Reply
Thanks given by:
Advertisement
Advertisement




Possibly Related Threads...
Thread Author Replies Views Last Post
  General News: Airtel offers free Disney+ Hotstar subscription for 1 year: Here’s how to avail it nairrk 0 194 11-03-2020, 07:11 PM
Last Post: nairrk
  General News: Jio woes postpaid users of airtel, Vodafone Idea with new offer nairrk 0 726 10-11-2020, 01:52 PM
Last Post: nairrk
  General News: Reliance Jio launches in-flight connectivity packs starting at Rs 499 nairrk 0 168 09-26-2020, 08:03 AM
Last Post: nairrk
  General News: Airtel partners with PepsiCo to give up to 2GB of data to its customers nairrk 0 190 09-01-2020, 06:17 PM
Last Post: nairrk
  General News: Airtel now offers free data coupons on Rs 289, Rs 448 and Rs 599 prepaid plans nairrk 0 163 08-30-2020, 09:41 AM
Last Post: nairrk
  General News: Airtel users can subscribe to annual plans or queue multiple recharges... nairrk 0 135 08-28-2020, 09:31 AM
Last Post: nairrk
  General News: Airtel brings free Disney+ Hotstar VIP subscription to more prepaid plans.. nairrk 0 157 08-21-2020, 07:29 AM
Last Post: nairrk
  General News: Airtel Rs 129 and Rs 199 prepaid plans now available pan India nairrk 0 144 08-17-2020, 06:18 PM
Last Post: nairrk
  General News: Airtel offering free 1GB data to select inactive prepaid users nairrk 0 166 08-12-2020, 01:08 PM
Last Post: nairrk
  General News: Airtel launches Ultra-Fast 4G services in Andaman & Nicobar with new optic fibre Link nairrk 0 146 08-10-2020, 03:17 PM
Last Post: nairrk

Forum Jump:


Users browsing this thread: 1 Guest(s)
Advertisement