Reliance Communications has acknowledged that it is in talks with Reliance Jio Infocomm to rent or lease towers from RCOM for the latter’s rollout of its 4G TD-LTE network. RCOM has a portfolio of around 55,000 towers with no external tenancy. It will be an impossible task for Reliance Jio Infocomm to rollout a Nationwide Network within few months for its ambitions launch considering the Manpower cost as well as the concerns of Right of Way for Underground OFC Cables.
We believe that a tower-sharing deal would be incrementally positive for RCOM. At an estimated tower rental of Rs30,000/tower/month, cash inflow could be around Rs9bn/p.a assuming Reliance Jio rents around 25,000 towers. Since the tower-sharing deal is likely to have a long tenor, RCOM could securitise the cashflows to reduce its debt burden.
RCOM’s country-wide CDMA network and 3G spectrum in the high potential markets of Mumbai and Delhi give it an opportunity to gain a better competitive position to other 4G LTE Players in the Market.
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