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Reliance Jio Inks Network Sharing Deal With Airtel, RCom Out?
Mukesh Ambani’s Reliance Jio and Sunil Mittal’s Bharti Airtel have joined hands to use each other’s telecom infrastructure, to rapidly deploy the fastest telecommunications standard; 4th Generation or 4G Service in India.
In a move that could have a very big and long term impact on the telecom segment, two giants, Reliance Jio Infocomm and Bharti Airtel have announced an agreement to share each other’s cell tower and optic fiber infrastructure. The newly befriended companies issued a joint statement,
“The cooperation is aimed at avoiding duplication of infrastructure, wherever possible, and to preserve capital and the environment. This will also provide redundancy in order to ensure seamless services to customers of the respective parties.”
What does the agreement bring to the table?
Under the agreement, Reliance Jio will gain access to Bharti’s countrywide tower and optic fiber network (85,000 Towers, in addition to fiber cable network of 1.75 Lakh Kilometers). This will help it launch various services much faster since it won’t have to go erecting towers or augmenting present ones at every location where Reliance Jio wants to extend its service. On the other hand, Bharti Airtel will be able to piggyback on Reliance’s 4G network. This will allow it offer roaming facilities to users.
Why did Bharti Airtel agree to such an agreement?
This agreement is by far one of the largest turn-around in India where once these companies were pure competitors. But Reliance Jio is the only company to have won 4G Permit in all of the 22 Telecom Circles in India. Airtel only has permits for eight circles. Though Airtel does have an extensive cell–tower network of its own, it can still use the telecom infrastructure that Reliance sets up. Additionally, Reliance Jio will pay Airtel to use its cell-network and this should immensely help the debt-ridden company to alleviate at least some of that burden.
Though this is surely a historic occasion, it puts a huge cloud of doubt over the agreement Reliance Jio had with Reliance Communications (RCom) for exactly this purpose. While Reliance and Airtel will surely benefit from ‘Economies of Scale’, will RCom contest this new development?
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Source: http://www.watblog.com/2013/12/11/reliance-jio-inks-network-sharing-deal-with-airtel-rcom-out/
