Competing telecom companies Bharti Airtel and Reliance Jio Infocomm on Tuesday announced an infrastructure-sharing arrangement. They will share the infrastructure they have created, including optical fibre network ( inter- and intra-city), submarine cable networks, towers and Internet broadband services.
The deal is expected to speed up Reliance Jio’s launch of broadband services. The Mukesh Ambani company had won 4G spectrum in 2010 but is yet to start the service. While Reliance Jio itself is laying optical fibre cable and setting up its towers, it needs much more infrastructure to offer pan-India data and voice services.
The two companies, however, did not disclose the extent of the sharing. Company insiders said this was an overarching agreement and specific plans will be formulated separately. Airtel’s network comprises 1.75 lakh route kilometre of optical fibre and 1.35 lakh towers.
In addition, when spectrum sharing is permitted, Reliance can ride on Airtel’s 2G and 3G bandwidth. Airtel, on the other hand, will get additional revenues by leasing out capacity.
The Sunil Mittal-backed Airtel can also look at taking 4G capacity from Reliance, which is the only player to have pan-India spectrum for 4G technology based broadband services.
May extend to roaming “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 optical fibre. The pricing would be at ‘arm’s length’, based on the prevailing market rates,” said a joint statement.
“The cooperation is aimed at avoiding duplication of infrastructure, wherever possible, and to preserve capital and the environment,” it added.
As part of this arrangement, the two players have already announced an agreement under which Bharti has provided capacity on its i2i submarine cable to Reliance Jio.
The partnership is a far cry from 2002 when the two had fought a bitter legal battle over the policy to allow limited mobility to fixed line telephone players.
Market watchers say the new deal could be a sign of the changing dynamics in the telecom sector that has been marred by corporate rivalry. For example, in the last few months Airtel had backed Reliance Jio’s views on policy issues related to 4G even at times contradicting the stand taken by the Cellular Operators Association of India of which Airtel is a key member.