RCOM has entered into active infra sharing with 4G entrant Reliance Jio, which allows RCOM to offer 4G services without investing much capex. RCOM active sharing limits the upside for the buyer of RCOM towers assets as demand by RCOM (anchor tenant) for additional towers in the near to medium term may not be much.
In our view RCOM had the option to either ask for a premium from Jio for trading of 800 spectrum or leverage Jio’s 4G network and offer 4G services. Charging a premium may have allowed RCOM to pay down some debt and invest in 3G but may have prevented RCOM from participating in 4G.
RCOM has chosen to offer 4G by leveraging Jio’s 4G network. Given that in the medium to long run 4G is likely to be more popular than 3G,