Reliance Communications (RCOM) has inked a master services agreement with Reliance Industries’ I-am-tired-of-waiting-for-its-launch data services venture Reliance Jio Infocomm, allowing the latter to share RCOM’s city fibre infrastructure across the country for its 4G services.
RCOM notes that this deal will cover nearly 500,000 fiber pair kilometers across 300 cities and towns in India and the pricing will be at ‘arm’s length’ based on prevailing market rates.
This is the third infrastructure sharing deal between RCOM and Reliance Jio Infocomm, after a Rs 1,200 crore fibre optic network infrastructure sharing deal in April 2013 and a Rs 12,000 crore worth tower sharing deal in June 2013, as part of which Reliance Jio Infocomm had leased RCOM’s 45,000 ground and rooftop based towers for its 4G services as well as create joint working arrangements to configure additional towers to be built at new locations.
RCOM CEO (Wireless) Gurdeep Singh had first mentioned this deal in June 2013, when he said they were in talks for a third deal with Reliance Jio Infocomm to share optic fibre in cities, with the deal expected to be announced by December 2013. However, earlier this year during the company’s Q3-FY14 earnings conference call, Singh had mentioned that the deal is still in negotiation and will be announced at the “appropriate time”.
Interestingly, RCOM also notes that it is currently discussing other mutual co-operation initiatives with Reliance Jio, although it didn’t disclose any specific details on these initiatives.
Earlier this year, Singh had mentioned that the Reliance Jio partnership allows RCOM to monetize their assets as well as lower their capex only to the electronics part in the future, since they have a reciprocity arrangement with Reliance Jio. This arrangement was expected to significantly fasten RCOM’s expansion plans in the country, since it provides them access to all infrastructure (fibres and towers) being laid out by Reliance Jio, at the same terms and conditions which RCOM had given earlier. (Read: RCOM’s Gurdeep Singh on whether Reliance Jio is a partner or competition)
Reliance Jio’s infrastructure sharing partnerships
– Last month, Reliance Jio Infocomm had inked a tower infrastructure sharing pact with Viom Networks, a joint venture between Tata Teleservices and SREI Infrastructure, allowing them to use Viom Networks’ pan India passive telecom infrastructure comprising of over 42,000 telecom towers across the country.
– It had signed a similar tower sharing infrastructure agreement with Bharti Infratel, allowing Jio to utilize Infratel’s tower infrastructure across the country, with the pricing at ‘arm’s length’ based on prevailing market rates.
– Jio Infocomm had also tied up with its competitor Bharti Airtel to share optic fibre, submarine cable networks, towers and Internet broadband services in December 2013. The company had then said this agreement was done to avoid duplication of infrastructure and it could be further extended to roaming on 2G, 3G and 4G services in the future. Jio had also earlier partnered with Airtel for international data connectivity.
– Reliance Jio had joined a consortium to set up a submarine cable system via the Bay of Bengal in April last year.
The company holds a pan-India Unified License and had secured 78.8 MHz spectrum in 1800 MHz band in 14 circles for Rs 11054.41 crore in the recently concluded spectrum auctions. It had mentioned plans of using the spectrum acquired in 1800MHz band along with its pan-India 2300MHz spectrum to address the expected increase in demand for digital services and improve its in-building coverage.
However, the service is yet to launch commercially in India, with just about an year to go before the BWA rollout obligations kicks in.
Last week, The Hindu Business Line had cited sources to report that Reliance Jio was testing its 4G services across 10 locations in Mumbai, Navi Mumbai and Ahmedabad and it’s expected to extend the testing to another 10 locations in Gujarat by next week. However, it’s worth noting that RIL has been doing 4G trials for quite some time now. It had first conducted a field trial of 4G service at its campus way back in November 2010 and had also reportedly started 4G service trials in Jamnagar in April 2012.