Reliance Jio Infocomm & Reliance Communications Intra-City Fiber Deal Likely at 4000 Cr

Currently 40% of Reliance Communications tower assets are supported with fibre backhaul and the remaining 60% is on Microwave backhaul as described here. We believe that Reliance Jio Infocomm 4G launch will allow Reliance communications to monetize intra-city fibre given Reliance Jio’s likely focus on data market.

That said, we note that a good part of RCOM towers were built for CDMA which has spectrum in the lower band ( 800Mhz), while
Reliance Jio 4G spectrum is higher at 2.3GHz. This in our view implies that RCOM may have to do incremental investments in tower assets to suit RIL
4G needs

We expect the monetization of intra-city fibre at 3x the price of inter-city fibre assets. (We estimate replacement value of the 70,000 km intra city fibre at INR 100bn and expect monetization of the intra-city fibre at 60% discount to the replacement value).
We note that Indian operators are in their early phase of investment in data.