RCom agrees to lease out intra-city fibre network to Reliance Jio

RCom agrees to lease out intra-city fibre network to Reliance Jio

Reliance Communication Ltd (RCom) has agreed to lease out its intra-city fibre network to Reliance Jio Infocomm Ltd for the roll out of its 4G services.

Anil Ambani-led RCom will earn an estimated amount of Rs 5,000 crore from leasing out its fibre optic network to the telecom arm of Mukesh Ambani-led Reliance Industries Ltd (RIL).

The two companies said in a statement that they had signed a master services agreement based on arm's length pricing at prevailing market prices.

Announcing the new pact, the companies said, "This 3rd agreement further strengthens the comprehensive framework of business co-operation between Reliance Jio Infocomm and Reliance Communications. The agreement is based on arm's length pricing at prevailing market prices."

People familiar with the deal said fibre pairs per kilometer could cost in the range of Rs 3 to Rs 3.5 lakh in large cities like Mumbai and Delhi, and up to Rs 50,000 per kilometer of fibre pairs in smaller cities like Rourkela or Patna. The national average, has been estimated at around Rs 1 lakh per kilometer of fibre pairs.

It is the third infrastructure sharing pact between the two companies. In August last year, it had signed a US$2.1 billion agreement for leasing RCom's mobile phone towers. Earlier in April, it had signed an agreement with RCom to use its inter-city fibre for its 4G network in a deal worth Rs 1,200 crore.

Reliance Jio, which is the only owner of countrywide 4G licence, has plans to start commercial services before the end of this year.

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