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RIL calls tower firm tenders for broadband

RIL calls tower firm tenders for broadband
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First Published: Wed, Feb 02 2011. 12 47 AM IST
Updated: Wed, Feb 02 2011. 10 33 AM IST
Mumbai: Taking its plans to roll out fourth-generation (4G) broadband services a step further, Infotel Broadband Services Pvt. Ltd has invited bids from telecom tower operators willing to lease out around 26,000 towers across India, two people familiar with the development said.
Infotel, now a subsidiary of Reliance Industries Ltd (RIL), won pan-India spectrum for broadband wireless access (BWA) last year.
One of the persons said that RIL had floated the request for proposal in early January. Neither he nor the other person wanted to be identified.
Viom Networks Ltd, India’s largest independent telecom tower company, and GTL Infrastructure Ltd will put in bids, executives at the companies said.
“RIL would need towers for its BWA venture and they would be potential customers for us. We will try and bid for their tenancy,” a Viom executive said.
A senior executive from GTL Infrastructure also confirmed the company’s interest. Neither he nor the Viom executive wanted to be identified.
A GTL spokesperson declined comment for this story.
RIL didn’t respond to an email query sent on Monday, or subsequent calls seeking comment.
In June, RIL, India’s most valuable company by market capitalization, announced its re-entry into the telecom space by acquiring a 95% stake in Infotel Broadband Services, a privately held telecom services company, for Rs 4,800 crore.
Infotel had, in June, received spectrum or air-waves to roll out broadband wireless services in 22 circles (or designated service areas) across India in a government auction by paying Rs 12,847.77 crore.
The acquisition marked RIL chairman Mukesh Ambani’s return to telecom after he exited the business in favour of younger brother Anil Ambani when the two carved up the Reliance empire between themselves and also signed an agreement to the effect that they wouldn’t compete with each other.
The brothers terminated the non-compete agreement in May, facilitating RIL’s re-entry into telecom.
Reliance Communications Ltd (RCom), which has its own telecom tower subsidiary Reliance Infratel Ltd, had earlier announced its intention of cooperating with RIL in the latter’s broadband initiative.
“As leading telecom infrastructure and content service providers, we look forward to offering our services to RIL and other BWA players, even while we compete for customers in the marketplace through our choice of different technologies,” RCom had said in a June statement.
RIL’s attempt to acquire tenancy on towers, which would be crucial for end-user connectivity, comes soon after it was reported to be in the process of finalizing vendors who would supply broadband equipment based on the so-called LTE, or long term evolution, technology.
RIL plans to roll out wireless broadband services by the end of the year.
“Infotel is in the process of finalizing the arrangement with leading global technology players, service providers, infrastructure providers, application developers, device manufacturers and others to leapfrog India to the 4G revolution,” RIL had said in a statement issued on 21 January, while announcing its results for the quarter ended 31 December.
The telecom tower business in India is set to get a shot in the arm with winners of 3G (third generation) and BWA spectrum preparing to roll out their services, analysts say.
“3G and BWA together could create as many as 100,000 new tenancies for telecom tower operators in the next two to four years and this would make up for the sluggish growth in tower tenancies over the last two years due to the regulatory conditions; security concerns and uncertainty over availability of equipment, especially from the Chinese manufacturers,” said Prashant Singhal, head of the telecom practice in India at international audit and consulting firm Ernst and Young.
Romal Shetty, head of the telecom practice at another international audit and consulting firm, KPMG, said the entry of a conglomerate such as RIL into the broadband wireless space would help provide telecom tower companies an extra opportunity for generating revenues even as the possibility of consolidation in the telecom space looms large.
“For telecom tower operations to be viable, firms need a tenancy ratio of at least two (two tenants per tower). If any consolidation in the industry happens, it would lead to falling tenancy ratios, and RIL’s BWA operations could partly compensate that,” Shetty added.
Both Shetty and Singhal said that Infotel seems to have set the ball rolling to launch its services at the earliest.
“To ensure that they do not lose out on the share of the consumer’s wallet to 3G services that are already being launched, RIL will look to launch at the earliest, especially since it has the ability to do so,” Shetty said.
Shares of RIL fell 2.57% on the Bombay Stock Exchange on Tuesday to close at Rs 895.65 each even as the bourse’s benchmark equity index, the Sensex, lost 1.67%.
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First Published: Wed, Feb 02 2011. 12 47 AM IST
More Topics: RIL | Infotel | BWA | Viom | GTL |