Reliance Jio, Airtel pact could drive up prices in Jan telecom bid

This mega deal, which is even bigger than the infrastructure sharing Reliance Infocomm has signed with Anil Ambani's Reliance Communications, is unprecedented. It will mean sharing of infrastruture for a whole range of telecom services and not just in one state but across the country.<br /><br />

FP Editors December 11, 2013 07:52:04 IST
Reliance Jio, Airtel pact could drive up prices in Jan telecom bid

New Delhi: Bharti Airtel and Reliance Jio Infocomm today announced a comprehensive telecom infrastructure sharing arrangement under which they will share infrastructure created by both parties. This will include optic fibre network - inter and intra city, submarine cable networks, towers and internet broadband services and other such opportunities identified in the future.

This mega deal, which is even bigger than the infrastructure sharing Reliance Infocomm has signed with Anil Ambani's Reliance Communications, is unprecedented. It will mean sharing of infrastructure for a whole range of telecom services and not just in one state but across the country.

A joint statement by the two companies said the arrangement could, in future, be extended to roaming on 2G, 3G and 4G and any other mutually benefiting areas relating to telecommunication, including but not limited to jointly laying optic fibre or other forms of infrastructure services. As part of this arrangement, Bharti and Reliance Jio have already announced an agreement under which Bharti has provided capacity on its i2i submarine cable to Reliance Jio.

This partnership or rather parleys between the two captains of India Inc - Reliance's Mukesh Ambani and Bharti's Sunil Mittal - have been going for some months. The first indication of any such alliance came yesterday, when agency stories quoted Ambani speaking of a collaboration with Bharti Airtel's Sunil Mittal for 4G services.

"For further enhancing the digital experience, we can have a collaborative partnership with our friend Mr Mittal," Ambani was quoted saying by PTI. He was speaking at the Progressive Punjab Summit and announced Rs 2500 crore investment in rolling out digital infrastructure for fourth generation or 4G telecom services. Incidentally, Bharti also announced a Rs 4,000 crore investment in 4G in the state this morning.

Reliance Jio Airtel pact could drive up prices in Jan telecom bid

Reliance Industries, chairman and managing director, Mukesh Ambani. AFP

The partnership announced today will need careful handling by both sides, which have till now functioned pretty much as arch rivals. As Firstpost said yesterday after Ambani's comments, this olive branch he has extended is important for several reasons.

First it comes just a few weeks before the spectrum auctions in January where there is expected to be a fierce fight between incumbent telcos including Bharti and Vodafone for retaining the precious 900 mhz spectrum in Delhi and Mumbai circles.

And Reliance, which has no spectrum in this band, could well play spoilsport by jumping in the fray. In Mumbai, for example, analysts have already pointed to the possibility of both Bharti's Mittal and Ambani possibly looking to acquire 900 mhz spectrum. Not only could this drive up prices of this scarce spectrum band, it could also ensure that either company gets a better grip of the 3G market because 900 mhz can easily be used to provide 3G services.

The second reason the partnership could be interesting is the traditional rivalry between the two telecom companies even in 4G. Reliance is the only company which holds a pan India 4G license but is yet to begin services. It has begun testing process but there is still no word on whether it will also offer voice along with high speed data on its 4G network and by when will roll out begin.

Whereas Bharti has already gained first mover advantage by launching services in some circles and is now planning to extend this, possibly to voice in Bengaluru.

Airtel and the Government of Punjab yesterday signed an agreement under which Airtel will take its high speed 4G LTE services to all towns and villages across Punjab and put the state on the data superhighway.

Airtel launched Punjab's first 4G LTE services in Chandigarh in March 2013 and as part of the agreement, the company will lay an additional 10,000 km of optic fiber across Punjab and expand its 4G footprint to cover most of the state's population over the next few years.

Disclosure: The Reliance Group has funded the promoter of Network18, which publishes Firstpost

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