RCom may sign deal with Etisalat for passive infra

Anil Dhirubhai Ambani-promoted Reliance Communications is close to signing a deal with UAE-based telecom company Emirates Telecommunications Corporation to share their passive infrastructure. According to sources close to the development, this deal will yield close to Rs 1,500 crore annually (Rs 15 billion).

It is likely to be under a revenue-sharing agreement spanned across 15 years.  This deal is likely to be signed by next week.

Last year Etisalat had forayed into the Indian telecom scene with the acquisition of 45 per cent stake in India's Swan Telecom for around $900 million (around Rs 4,140 crore or Rs 41.4 billion).

The deal puts the value of the Indian GSM service provider, which holds telecom licences in 13 circles, at around $2 billion.The company plans to launch its first telecom operation during April-June next year.

However, RCom in an official statement said, "A number of new operators are in discussions with us for sharing our state-of-the-art nationwide passive infrastructure."

Last year, Swan Telecom also got into a roaming agreement with state-owned Bharat Sanchar Nigam, which will allow the private company to use the state-owned firm's national network to offer mobile services.

This deal, however, faced severe criticism with critics arguing that BSNL had signed an agreement with a company that hasn't even started operations.

In April, 2008 the government allowed infrastructure sharing-both passive and active -- in the telecom space, which opened up the market for various independent tower tower companies and new telecom operators who cannot afford to set up their own towers.

This deal comes close on the heels of telecom rival's Tata Teleservices' deal with Quippo Telecom to merge its infrastructure business with independent infrastructure equipment rental company Quippo Telecom Infrastructure to form India's largest independently managed tower company with an enterprise valuation of Rs 13,000 crore (Rs 130 billion).

RCom's infrastructure arm, Reliance Infratel, at present  has around 40,000 towers at present. Meanwhile, Indus, a combined venture by rival telecom operators Bharti Airtel, Vodafone Essar and Idea Cellular, at present owns about 80,000 towers, India's largest such company.