Reliance Jio Infocomm announced on April 2, 2013 a telecom infra sharing deal for its telecom venture with Reliance Communications (RCom) of Anil Ambani Group. The deal entails payment of Rs12bn by RJI as indefeasible right to use (IRU) fees for lifetime usage of 120,000 kms of nationwide inter-city optic fibre network owned by RCom. It also gives RCom reciprocal access to RIL’s future fibre network.
It gives some visibility on Reliance Jio’s 4G LTE telecom venture, which had limited news flow since they acquired nationwide 4G spectrum in June 2010. We expect launch of RIL’s telecom services by end of CY13E. Access to RCom’s optic fibre network is not only less expensive than replacement cost, but also gives RIL advantage on time-to-market for LTE services. It goes against the market concern that RIL will have to buy significant telecom infrastructure for the venture, increasing non-core
capex and diluting cash returns in the medium term.