Jio is demerging its tower and fibre assets into a separate firm.
Jio is demerging its tower and fibre assets into a separate firm.

Bharti Infratel to keenly watch rival Jio monetize tower assets

  • This comes after Reliance Jio on 17 January said that it proposes to transfer its fibre and tower businesses to separate companies
  • The impact on Bharti Infratel can only be assessed based on how Jio’s assets would be shared with rival telecom operators

NEW DELHI: Bharti Infratel Ltd will closely watch how Reliance Jio Infocomm Ltd, which competes with its parent Bharti Airtel in the market for telecom services, hives off its tower assets and monetizes surplus capacity.

“We will have to wait and watch," Bharti Infratel chief executive D.S. Rawat said in a post-earnings call with analysts when asked how Jio’s plan to hive off tower assets will impact its business prospects.

“We are not aware of any agreements that they have signed...Jio could look at opportunities based on what percentage of towers are shareable and where they could share sites. We will have to wait and see how this plays out," Rawat said.

This comes after Reliance Jio on 17 January said that it proposes to transfer its fibre and tower businesses to separate companies and enter into arrangements for long-term use of these assets.

Analysts say that such a move by Jio would increase competition in the tower operator segment and could hurt Bharti Infratel. “Jio is in the process of demerging its tower and fiber assets into a separate company. Jio will lease the infrastructure from these companies and would look to raise funds in these companies. Assets and part of the debt will move to these companies, making Jio asset light. Part of the future capex will also move. Jio is also open to sharing its tower and fiber with competition. While we look forward to more details, this can be a potential competitor for Bharti Infratel," BNP Paribas said in an 18 January note.

However, the impact on Bharti Infratel can only be assessed based on how Jio’s assets would be shared with rival telecom operators. “Allowing full sharing of a key asset that bestows significant competitive advantage is going to be a hard decision (for Jio)," Credit Suisse said in a note dated 17 January.

Reliance Jio in December 2017 signed an agreement with Reliance Communications to buy the latter’s telecom assets including over 43,000 towers.

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