Mukesh Ambani's 4G arm Reliance Jio inks Rs 1,200 crore pact with Anil Ambani's RCom

Billionaire Ambani brothers on Tuesday 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 BSE 10.86 % for the roll-out of 4G services. The deal will allow both companies to mutually utilise towers and related assets.

"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.

Shares in Anil Ambani group companies rose sharply after the deal, sparking speculation about a wider rapproachement among the brothers.

Reliance Communications provisionally closed 16.9 percent higher, while Reliance Infrastructure Ltd extended gains to 4.8 percent, and Reliance Capital Ltd gained 5.6 percent.

Mukesh Ambani-controlled Reliance IndustriesBSE 2.03 % rose 2.1 percent.

Reliance Communications, said the deal was the first in a "comprehensive framework of intended business co-operation" between Reliance Jio and the company.

Deven Choksey, MD, KR Choksey Securities said, "The deal will help Reliance Communication as well as Reliance Jio. It is good for both the companies as it will help Reliance Jio to reach customers faster with existing network of RCOM."