Eight years after partitioning the Reliance Group between themselves, the Ambani brothers, Mukesh and Anil, have joined hands in the telecom business.
The Mukesh Ambani-controlled Reliance Jio Infocomm (RJI) on Tuesday signed a Rs. 1,200-crore agreement with Anil Ambani's RCOM to use the latter's nationwide optic fibre cable (OFC) network for the rollout of its high-speed wireless broadband (4G) services.
This is a win-win situation for both companies. RJI will get immediate access to a readymade 120,000-km pan-Indian OFC network for the launch of its proposed 4G services, while RCOM, weighed down by debts of Rs. 37,000 crore, will get additional revenues from its network.
"The two companies will soon announce a similar deal for using RCOM's telecom towers," said a source.
The RCOM spokesperson hinted at such a deal: "This agreement is the first in an intended comprehensive framework of business cooperation between RJI and RCOM." The RIL spokesperson declined to comment.
Over the past couple of years, Anil has unsuccessfully tried to sell a stake in his telecom towers business.
The reason: potential buyers have baulked at the high asking price.
{{/usCountry}}The reason: potential buyers have baulked at the high asking price.
{{/usCountry}}The valuation of RCOM's telecom towers business is expected to appreciate substantially if the brothers do sign a deal.
This is expected to help RCOM sell a portion of this business and retire some of its debt.
The Reliance Group entered the telecom business in 2002.
However, the telecom venture, Mukesh's dream project, went to Anil under the terms of the June 2005 partition agreement.