RIL and RCom to Tie-Up for Revolutionizing 4G in India

Mukesh Ambani owned Reliance Industries Limited to tie-up with younger brother Anil Ambani’s Reliance Communication to revolutionize 4G in India. RIL is likely to use RCom’s access systems, fiber-optic backbone, international cable systems and internet gateways to provide high-speed data services. This will be the first major collaboration between the Ambani brothers since the division of Reliance conglomerate in 2005.

After the termination of the non-compete agreement between the Ambani siblings in 2010, RIL re-entered the telecom industry. It acquired licenses for nationwide broadband services for Rs 13,000 crore, the only company to do so.

For the first phase of RIL’s wireless broadband foray, it plans to lease around 26,000 towers from telecom power operators. The major source of its infrastructure will be contributed by Reliance Communications, the telecom industry setup by Anil Ambani. The partnership does not include any equity investments by RIL in Reliance ADA Group’s Telecom arm, RCom.

The RIL-RCom partnership will permit RIL to carry data traffic on RComs’ pan-India 2.8 lakh fiber optic network, the largest in the sector. Apart from using RComs’ towers, RIL intends to use the optic fiber network and transmission facilities such as national and international long distance networks to carry its data traffic. A finalized deal will enable RIL’s access to Reliance Communications’ 50,000 towers spread across 1,500 cities and towns in India.

RIL plans to offer data services at costs as low as Rs 10/GB, as opposed to competitors’ price of Rs. 100/GB. Both companies will also work towards launching tablet devices at low prices. Currently, RCom offers tablets at Rs 12,999 apiece. Spokespersons from both the companies informed that the tie-up aims at bringing down the price to Rs 6,000 apiece.

RIL has formed a core team to focus on this project. Most of the members of this team were a part of Reliance’s first telecom foray nearly a decade ago. The task of execution of this project is delegated to Jyotindra Thacker, brother-in-law of Manoj Modi.

When RIL was contacted with regards to the tie-up, an official spokesperson from RIL said,” We had issued a tender and all tower and fiber companies had given their quotes. We have not decided anything so far.”

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