New Delhi: Reliance Communications has got a deal worth more than $2.2 billion over 10 years from Etisalat’s Indian telecoms joint venture, which will use Reliance’s mobile towers to roll out its network.
Etisalat DB Telecom India, in which the Gulf Arab region’s second-largest telecoms operator owns a 45% stake, has licences to provide mobile services in 15 of India’s 22 telecoms zones but is yet to start services.
The company will outsource its network infrastructure need, including mobile tower requirement, to Reliance Communications, India’s No. 2 mobile operator, the two firms said on Wednesday.
“This alliance provides us with key, strategic advantages that will ensure a robust, speed to market and cost-effective roll-out of services,” Etisalat chairman Mohammed Hassan Omran said in a statement.
Indian mobile operators are increasingly sharing base stations and tying up with other firms and independent tower firms to cut costs as they expand across vast rural districts and penetrate smaller towns, where low-income subscribers dominate.
“Both companies gain in terms of cost optimization. Since there is marginal increase in capex and cost, the value mentioned largely flows to the bottomline,” said Inder Bajaj, who heads Reliance Infratel, the tower unit of Reliance Communications.
“We are in advanced discussions with many new and existing operators, which we will announce at the right time,” he said.
Shares in Reliance Communications, which has a market value of $11.5 billion, were up 1.1% at Rs270.50 by 12:46pm in a Mumbai market down 0.1%, after jumping as much as 4.2% after the announcement.
Earlier this year, Unitech Wireless, in which Norway’s Telenor is taking majority stake, struck a deal with Indian firms Wireless-TT Infoservices and Quippo Telecom to lease towers.
Top mobile firm Bharti Airtel, Vodafone Essar and Idea Cellular have formed a joint venture that has more than 100,000 towers.
Reliance Infratel has around 50,000 towers, Bajaj said.
Telecom tower companies have also attracted interest from foreign investors.
New York-listed American Tower in March agreed to acquire Indian tower firm Xcel Telecom in its bid to expand in the world’s fastest-growing mobile market.
Bharti Airtel’s tower unit has raised $1.35 billion by selling stake to private equity firms, while institutional investors own 5% of the Reliance Infratel unit.