Mukesh Ambani’s Reliance Jio and Sunil Mittal-led Bharti Airtel are headed for an awkward business partnership, as signals grow that the telecom partners may turn rivals if the former begins to offer voice services under an infrastructure sharing arrangement between the two firms.
Indications are that Reliance Jio will. It already has a nationwide licence for broadband wireless access spectrum and can also offer voice in the 2.3-gigahertz band under the unified service licence it owns.
"We are not against Jio offering voice, but are against offering it through the backdoor using a BWA licence," says Rajan Mathews, director-general of the Cellular Operators Association of India. "This they have done earlier too," he added.
Mathews was referring to Reliance Infocomm, that offered ‘limited mobility’ in 2002 using its fixed line licence and went on to convert it to a full mobility licence after paying a fine, following a protracted battle with other telecom operators. Reliance Infocomm later went to Mukesh’s younger brother Anil Ambani during the division of their family business assets in 2005.
However, with Jio filing application to bid for 2G spectrum auction that begins on February 3, Jio’s voice services will be in direct conflict with Airtel’s services. "It does not mean, ending the current arrangement, but bargain for more revenue," said a senior Bharti Airtel executive.
Bharti Airtel has signed a comprehensive infrastructure sharing agreement with Reliance Jio under which revenue sharing is on an ‘arm’s length’ basis based on prevailing market rates. Nilanjan Roy CFO Bharti Airtel (India) in an analyst call on Wednesday said, "In any partnership we look at a win-win situation."
"This is a win–win for customer and assures more revenue for Bharti," said BK Syngal, former chairman of VSNL Ltd.