Ambani brothers further strengthen their business

Mukesh Ambani-promoted Reliance Jio Infocomm Ltd last month got into an agreement with Anil Ambani's Reliance Communications Ltd (RCom) to share the latter's inter-city optic fibre network spread across 120,000 km across the nation, two Ambani brothers are in talks to strengthen their business relationship by announcing two more infrastructure sharing agreements between their respective telecommunication firms by mid-June.

Reliance Jio has pan-India fourth generation (4G) spectrum (2,300 Mhz) and has paid Rs 1,200 crore as an upfront one-time fee to Rcom for a 20-year agreement to use the infrastructure to launch high-speed data service.

The deal marked a new era of partnership between the brothers, who split their empire into two separate units in 2005. 

According to industry sources, “the talks for two more infrastructure sharing agreements, respectively for the intra city optic-fiber network and telecom towers, have moved to an advanced stage and are likely to be announced in four to six weeks," said a person familiar with the discussion, who did not wish to be identified. "This is expected to bring far bigger revenue in terms of fee."

RCom has fibre penetration of over 72 per cent in 330 cities across the country where it is currently offering third generation (3G) services. But the utilisation of this fibre as per estimates is not more than 18 per cent. Similarly, in another 690 cities, RCom has fibre which supports its CDMA operations, including its dongle-based data service. Even here, the utilisation is less than 80 per cent. Since these are intra-city fibre networks, it takes much longer to build as several approvals are required for that. Hence, it is costlier asset and expected to fetch higher fee.

Such efforts can help the company bring down its Rs 36,000-crore debt and increase operational efficiency with lower operational costs. It reported a net profit of Rs 105 crore for the quarter ended December 31 with a revenue of Rs 5,301 crore.

Source: http://cablequest.org/news/broadband-and-iptv-news/item/2429-ambani-brothers-further-strengthen-their-business.htmlSource: http://cablequest.org/news/broadband-and-iptv-news/item/2429-ambani-brothers-further-strengthen-their-business.html