Ambani reunion sparks hopes

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Mumbai: The first-ever business deal between Mukesh and Anil Ambani since  they split the Ambani empire in 2005 triggered hopes of further collaboration between the Ambani brothers.
In a statement, both the groups held out the possibility of more such collaborations in the future, saying that this agreement is the “first of an intended comprehensive framework of business cooperation between Reliance Jio and Reliance Communications.”
The pact in future may be extended to Anil’s RCom leasing out space on its 20,000 telecom towers  to Reliance Jio to offer voice services along with broadband.
The markets gave the thumbs up to the deal and the Anil Ambani group shares went up because they see revenue coming into the group from the towers business.
The present deal allows Mukesh’s Reliance Jio Infocomm Ltd to use the fibre-optic network of his younger brother’s firm Reliance Communication. This saves hundreds of crores for Mukesh’s firm as analysts claim that the deal to be under-priced.
“The deal is highly underpriced,” said Anil Kumar of Telecom Watchdog. Laying a fibre optic network costs around Rs 1 lakh per kilometre, so RIL Jio has got this really cheap. “But we don’t know the details of the deal so it depends on the arrangement that they may have. One does not know what RCom is getting out of it,” Kumar added.
The deal, according to the press release issued by RIL is a “definitive agreement for approximately Rs 1,200 crore as one time indefeasible right to use (IRU) fees for sharing RCom’s nation wide inter-city fibre optic network infrastructure.”
Ostwal  said “This backward integration for RIL was inevitable and they got it cheaply from Anil. But it will not help the company’s debt position.” 
"It’s a win-win situation for both the Ambani groups, said Kejriwal. “RCom gets Rs 1,200 crore for an underutilised network and Reliance Jio will be able to go nationwide in one go if it wants to,” he explained.
 
Next: Mukesh Ambani inks Rs 1200 crore deal with Anil Ambani's Reliance Communications

Mukesh Ambani inks Rs 1200 crore deal with Anil Ambani's Reliance Communications
Mumbai: Billionaire Ambani brothers today struck a Rs 1,200-crore deal wherein Mukesh will use his younger sibling's optic fibre network for launch of his telecom venture.
Under the pact, Mukesh Ambani-led Reliance Industries' telecom arm will hire nationwide optical fibre network of Reliance Communications for the roll-out of 4G services. 
"Reliance Jio Infocomm Ltd and Reliance Communications Ltd today announced the signing of a definitive agreement for approximately Rs 1,200 crore as one-time indefeasible right to use (IRU) fees for sharing RCom's nationwide inter-city fibre optic network infrastructure," RCom said in a statement.
Under the terms of the agreement, Reliance Jio Infocomm will utilise multiple fibre pairs across RCom's 1,20,000 kilometres inter-city fibre optic network to provide the backbone for rolling out its 4G services.
As per the agreement, RCom will in turn have reciprocal access to optic fibre infrastructure to be built by Reliance Jio Infocomm in the future. "The agreement provides for joint working arrangements to be put in place immediately for upgradation of the optic fibre network, to ensure seamless delivery of next generation services," the statement said.
This agreement is the first in an intended comprehensive framework of business co-operation between Reliance Jio Infocomm and RCom to provide for optimal utilisation of the existing and future infrastructure of both companies on reciprocal basis, including inter alia, inter-city fibre, intra-city fiber, towers and related assets. Reliance Jio Infocomm (RJI), formerly Infotel Broadband, won 4G spectrum for pan-India services in 2010, but the company is yet to launch its services. 
Government recently approved norms that would allow RJI to even provide mobile phone calls service using its 4G spectrum. This leaves room for Mukesh Ambani's re-entry into mobile phone services business after 2005 following Anil Ambani moving out with RCom, formerly Reliance Infocomm, Reliance Energy and Reliance Capital. 
The agreement provides relief to RCom which reported net debt of around Rs 37,360 crore as on December 31, 2012. The deal paves the way for further sharing of infrastructure between the two firms as the agreement talks about "optimal utilisation of existing and future infrastructure of both companies on reciprocal basis, including inter alia, inter-city fibre, intra-city fibre, towers and related assets."
RCom has been looking to sell stake in its tower firm Reliance Infrastructure but has not zeroed in on to any of the proposals. The company has also held discussion with various firms to lower its stake in under-sea cable firm Globalcom.