India's Reliance Industries (RIL), which is rolling out a nationwide 4G network, has signed a landmark 12 billion rupee ($220.5 million) deal to share fiber with Reliance Communications.
RIL subsidiary Reliance Jio Infocomm has negotiated to use capacity on RCom's 120,000km fiber network as a backbone for its LTE network, the companies announced yesterday.
Under the deal, Reliance Communications (RCom) will also be allowed to access fiber infrastructure that Infocomm deploys in the future.
This marks the first business deal between Mukesh Ambani – who owns RIL – and his brother Anil – who owns RCom – since the siblings acrimoniously split up their deceased father's business empire eight years earlier.
As part of this split, the Ambani brothers signed a pact agreeing not to compete in each others' sectors. But this pact expired in 2010, and a month later RIL spent around $1 billion to acquire Infotel Broadband and its nationwide 4G spectrum licenses.
Relations between the brothers have warmed since the split, and a telecom alliance between the pair has been expected for some time. In January, rumors circulated that RCom and RIL were in talks over a tower-sharing arrangement.
Yesterday's fiber announcement in fact indicates that the deal is the first step in a planned “comprehensive framework of business co-operation” between the two companies. This will include reciprocal sharing of assets including “intercity fiber, intra-city fiber [and] towers.”