The deal, which could mean lower costs and a faster launch for the already delayed high-speed Internet service, is the third such for the Reliance Industries Ltd subsidiary which has similar arrangements with Reliance Communications Ltd and Bharti Airtel.
The agreement, referred to as a master services agreement, ensures that RJIL will have access to Bharti Infratel’s towers wherever available for its communications services foray, expected by September. RJIL started its first trial of 4G services in Delhi, Mumbai and Jamnagar last year.
RJIL is the only telco to hold a pan-India unified licence, and is expected to launch 4G technology-based high-speed wireless communications services on 2300MHz spectrum in 22 circles and 1800MHz spectrum in 14 circles that, it acquired in auctions held in 2010 and last month, respectively.
Bharti Infratel is the second-largest telecom tower company in the country with a consolidated portfolio of around 82,000 telecom towers, including around 35,000 of its own towers and a 42% equity interest in Indus Towers, the country’s largest.
“This agreement is in line with our earlier comprehensive telecom infrastructure sharing arrangement with Bharti Airtel Limited aimed at avoiding duplication of infrastructure, wherever possible, and to preserve capital and the environment,” Reliance Jio managing director Sanjay Mashruwala said in a statement.
The statement also added that RJIL has increased its employee strength to 3,000. Analysts say RJIL is expected to increase this to 10,000 in the next fiscal.
The tower deal comes a fortnight after department of telecommunications officials confirmed that all winners in last month’s auction had paid the first tranche of their winning bids. RJIL bid around Rs11,000 crore for spectrum in 14 circles. The 1800 MHz that it has bought can be used to shuffle between 2G voice services and 4G services.
The company paid around Rs12,847 crore for the 2300MHz spectrum won in a 2010 auction. This is expected to be used mainly for enterprise 4G customers requiring high bandwidth and mobility, using TD (Time Division) variant of the 4G technology or Long Term Evolution (LTE).
“They haven’t given any valuation of the deal. They need the towers. What is interesting is that they have not signed with Indus towers as yet,” a Mumbai-based analyst with a multinational brokerage firm said. He further added that this deal was likely to be on the same lines as any other operator in a partnership with Bharti Infratel.
On Tuesday, shares of Bharti Infratel rose 2.49% to Rs191.40 on BSE, while the exchange’s benchmark Sensex gained 1.26% to 21,209.73 points.
The delay in RJIL launching services has most technology analysts worried because of its potential to hold up the adoption of the LTE technology.
In a report last week, US-based ABI Research said the LTE subscriptions reached 229.7 million in 2013. The company further said that TD-LTE, a variant currently used by Bharti Airtel in some cities, accounted for 5% of the global LTE market, while 94.2% of the LTE market was taken up by FD-LTE in 2013.
Indian telcos, including Vodafone India Ltd, Idea Cellular Ltd and Bharti Airtel, said they have acquired large chunks of 1800MHz spectrum in the February auction so as to be able to offer FD-LTE.
ABI Research also said it expected LTE connections to grow at a compounded annual growth rate of 43.6% in the next five years to reach two billion connections.
The GSM Association, the lobby group for telcos that use the GSM technology standard, said it expected global LTE subscribers to cross one billion by 2017, mainly driven by growth in India and China.