Unprecedented Mega-Deal In Indian Telecom As Reliance Jio & Airtel Joins Forces To Share Infrastructure!
Hold on a moment, and let it absorb you: Mukesh Ambani led Reliance Jio has joined hands with Bharti Airtel; two strategic rivals have joined forces which has the potential to disrupt Indian telecom market!
Officially speaking, this is a telecom infrastructure sharing arrangement, under which both the parties shall share infrastructure created by both the parties.
The companies said in a joint statement, “The cooperation is aimed at avoiding duplication of infrastructure, wherever possible, and to preserve capital and the environment. This will also provide redundancy in order to ensure seamless services to customers of the respective parties.”
They have typically kept this arrangement open ended as they also said that this arrangement can be applied to their respective 2G, 3G and 4G services and, “any other mutually benefiting areas relating to telecommunication, including but not limited to jointly laying optic fibre or other forms of infrastructure services.”
Who Will Get What?
Bharti Airtel is India’s biggest telecom operator and infrastructure provider. Under this new mega-deal, Reliance Jio can now access Bharti’s nationwide tower and network and optic fibre network by paying a service fee. As Bharti is reeling under debt and pressure to increase their profits after their African safari adventure, will need the much needed cash and help them to overcome debt.
Bharti has 85,000 towers spread all over India; along with 1.74 lakh kms optic fibre network inside India and a global network of optical fiber of 2.25 lakh kms length which covers 50 countries and 5 continents. This network includes i2i Submarine cable system which runs from Chennai to Singapore, and SMW4 submarine cable system which connects Chennai with Mumbai along with Singapore and Europe.
Reliance Jio will have access to them all.
On the other other hand, Reliance Jio has nation wide 4G license which will immensely help Bharti to roll out its 4G service. Bharti has license in only 8 circles. Additionally, Bharti can utilize Reliance’s extensive 4G and 3G network all over India to provide roaming facility along with Internet facility to its users.
Win Win Situation for both parties?
Reliance Jio is the new kid on the block, which needs infrastructure support to start it’s nation wide telecom services, and has some ambitious plans in the 4G domain. Now, they can easily start any services they want using Bharti Airtel’s huge infrastructure. And Bharti needs cash desperately which would be provided by Reliance Jio for its infrastructure usage. It is a definitely win-win situation for both companies.
Start of Market Monopoly?
But, from the end user’s point of view, this can bring in both good news as well as bad news.
Remember the golden days of telecom industry, when in the early 2000, Mukesh led Reliance Telecom made its market debut and literally disrupted the market by offering mobile for Rs 500? Later on the company came under Anil Ambani.
The same thing can happen now as they will have complete market dominance of 4G as well as 3G. If Mukesh’s plans are to be believed, he can roll out immensely cheap telecom services which can make other telecom operators like Idea and Vodafone literally bankrupt.
Or, they can increase their price and make huge profits as well. The end user will have little or no option as Bharti and Reliance won’t compete in prices atleast.
What is your views on this telecom mega-deal? Will it benefit the end users or the corporate and share holders? Please share your views by commenting right here!