Anil Ambanis Reliance Communications (RCom) is close to sealing a tower-sharing deal with elder brother Mukesh Ambanis telecom firm Reliance Jio Infocomm.
Sources in the know of the development said that according to the broad contours of the deal,RComs tower arm Reliance Infratel would provide around 30,000 telecom towers on a rental basis to Reliance Jio.
The senior Ambanis firm has been able to get a hefty discount of around 40% to the current market rentals for towers. The deal is set to be closed early next week.
Reliance Jio is in discussions with RCom and the company is negotiating for a monthly rental of R17,000 per tower. No final agreement has been reached yet, sources said.
Reliance Jio did not respond to FEs email query on the subject.
An RCom spokesperson also declined comment.
However,some sources close to the deal said that the discount is in the range of 25-30%. RCom is offering this discount because of huge scale,considerable savings in common costs,and large benefits to RCom from getting towers that Reliance Jio will build and provide at the same discounted rates. Further,this will also help RCom monetise its tower business at better valuations and reduce debt.
Monthly rentals of telecom towers are R28,000-30,000 per tower on average. Reliance Infratel has 45,000 towers. It has an average tenancy ratio,or tenants per tower,of 1.67. Bharti Infratel,which is the tower arm of Sunil Mittals Bharti Airtel,has a tenancy ratio of 1.81,while Indus towers the largest tower company and a three-way joint venture between Bharti,Vodafone and Idea has a tenancy ratio of 1.99.
Analysts maintain that RCom may agree to lease out the towers at a lower rental,as it has excess capacity. However,there could be some up-front payment that it may receive as part of the deal.
The deal,once signed,would be a significant booster for RCom which last month signed a R1,200-crore infrastructure sharing pact with Reliance Jio wherein the latter would use its 1,20,000-km optic fibre network for carrying inter-city data traffic. A deal for sharing intra-city data traffic between the two is also in the offing.
However,it remains to be seen whether Reliance Jio would enter into a tower-sharing pact only with Reliance Infratel or if it signs up with some other tower owners also. Bharti Infratels vice-chairman and MD Akhil Gupta said on Tuesday that the firm plans to talk to Reliance Jio for a tower-sharing pact.
The chances of Reliance Jio entering into pacts with multiple operators in all spheres gained ground after it signed a pact with Bharti last month wherein the former would use the latters undersea i2i submarine cable networks to provide data connectivity across Asia-Pacific.
A joint statement then by Reliance Jio and Bharti had stated that they would explore other areas of partnership also.
RCom,which is saddled with a R37,360-crore debt,has been looking for ways to reduce it through some stake sale in its ventures. It had earlier tried to sell stakes in its tower arm Reliance Infratel to another tower firm GTL but the deal fell through.
Last year,Anil Ambani had said the company is in advanced stages of negotiations with a number of consortia that have expressed great interest in this very valuable asset (tower business). But the deal never came through. Currently,RCom is also in talks with a consortium of global private equity players to sell stake in its subsidiary Reliance Globalcom.
RCom shares closed up 8.3% at R105.5 apiece on Thursday on the Bombay Stock Exchange,after gaining 41% in the last one year.