Ambani brothers in Rs1,200-crore telecom infrastructure deal

Ambani brothers Mukesh and Anil have finally come together in a Rs1,200-crore deal wherein Mukesh's Reliance Jio Infocomm Ltd will use the optic fibre network of Anil's Reliance Communications for the roll-out of 4G telecom services.

The deal will allow the two companies to utilise towers and related assets of each other.

"Reliance Jio Infocomm Ltd and Reliance Communications Ltd today announced the signing of a definitive agreement for approximately Rs1,200 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.

The agreement gives Reliance Jio Infocomm indefeasible right to use (IRU) multiple fibre pairs across RCom's 1,20,000 km inter-city fibre optic network for rolling out its 4G services.

Rcom, in turn, will 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 beginning of a comprehensive business co-operation model planned by the two groups to optimally utilise telecom infrastructure assets, both existing and future, the statement said.

The comprehensive framework of business co-operation will help the two companies optimally utilise, on a reciprocal basis, infrastructure assets of both companies, including inter-city fibre, towers and related assets.

This is the first time the two brothers are entering a business deal after the two split the then Reliance Group to form Reliance Industries and Anil Dhirubhai Ambani Group (See: Reliance after the split)and  (See:Bombay High Court clears RIL demerger).

Reliance group was founded by Dhirubhai Ambani in 1966 as a polyester firm had grown into the country's most valued firm with interests in financial services, petroleum refining and power sector by the time Dhirubhai died on 6 July 2002.

Since then, Reliance was headed by his two feuding brothers, Mukesh Ambani and Anil Ambani, who split Reliance Industries into two groups in June 2005.

Anil Ambani got the responsibility of Reliance Infocomm, Reliance Energy, Reliance Capital and RNRL, which together later formed a new Reliance Anil Dhirubhai Ambani group. Later, this group entered the power sector through Reliance Power, and the entertainment sector by acquiring Adlabs.

Mukesh Ambani who continued to control the group's petrochemicals and refining operations formed Reliance Industries Ltd (RIL).

The deal revved up stocks of Almost all Anil Ambani Group firms. Reliance Communications were up 16.9 per cent at the close of trading, while Reliance Infrastructure Ltd gained 4.8 per cent, and Reliance Capital Ltd gained 5.6 per cent.

Mukesh Ambani-led Reliance Industries also gained 2.1 per cent.

The 50-share Nifty rose 0.44 per cent, while the benchmark BSE sensex was up 0.6 per cent.