India’s Ambani brothers have signed a $2 billion deal to share network infrastructure, aimed at speeding up the rollout of 4G services.
Under the arrangement, Reliance Jio Infocomm (Mumbai, India) – owned by Mukesh Ambani – will lease up to 45,000 sites owned by Reliance Communications (Mumbai, India), the mobile operator controlled by Anil Ambani.
In a joint statement on the tie-up, the two operators said it would allow them to derive major benefits from the sharing of capital and operating costs.
Reliance Jio Infocomm is making a push into 4G using airwaves it bought in 2010 and reckons the leasing arrangement will accelerate its entry into the market.
According to India’s Economic Times newspaper, Mukesh Ambani last week said Reliance Jio Infocomm was still about a year away from launching 4G services but expected to make rapid progress henceforth.
The operators say the deal provides for “joint working arrangements to configure the scope of additional towers to be built at new locations”.
Earlier this year, the two operators teamed up on a similar deal that saw Reliance Communications agree to share its fiber-optic network with Reliance Jio Infocomm in exchange for a one-off payment of INR12 billion ($220 million).
That collaboration marked the first time the Ambani brothers had come together since the family business empire was divided between them in 2005.
Anil Ambani’s Reliance Communications has been under considerable pressure to reduce its mountain of debt, and the latest agreement on 4G should translate into substantial revenues for the operator.
Reliance Jio Infocomm, meanwhile, would probably have to invest considerably more in rolling out its own network than it will pay to use the infrastructure of Reliance Communications.
Indeed, shares in Reliance Communications fell after the deal was announced because Mukesh Ambani is thought to have secured a particularly good deal in terms of pricing.