Bharti Airtel Ltd., India’s largest mobile-phone operator, agreed to provide billionaire Mukesh Ambani’s competing broadband venture data capacity on its submarine cable connecting India and Singapore.
Reliance Jio Infocomm Ltd., a Mumbai-based unit of Ambani’s Reliance Industries Ltd., will use dedicated capacity on Bharti’s i2i submarine cable to extend its network to customers in the Asia Pacific region, the companies said in a joint statement today. The two companies will consider other “mutual areas of cooperation and development to leverage their respective assets,” they said.
The deal signals Ambani is preparing to start his fourth-generation network, after earlier in the month laying aside differences with his younger brother Anil and agreeing to share his Reliance Communications Ltd.’s fiber-optic network. Billionaire Sunil Mittal may have agreed to provide capacity on the cable to his rival because New Delhi-based Bharti has surplus, according to Urmil Shah, an analyst at Kim Eng Securities India Pvt. in Mumbai.
“These submarine cables have significant spare capacity,” said Shah. “If Bharti had not offered it, Reliance Jio could have gone to Tata Communications as well.”
Tata Communications Ltd., based in Mumbai, provides long-distance telephone and Internet services. It owns and operates a submarine cable system and data centers.
Bharti fell 0.3 percent to 299.80 rupees as of 1:14 p.m. in Mumbai trading, compared with a 0.4 percent decline in the S&P BSE Sensex. Reliance rose 1.5 percent to 801.55 rupees.
Mukesh Ambani spent 48 billion rupees buying nationwide broadband spectrum in 2010, marking his re-entry into the telecommunications industry after a feud with his brother split their father’s business empire.
The agreement with Bharti will allow Reliance Jio to use a dedicated fiber pair on i2i’s cable that connects the southern Indian city of Chennai with Tuas in Singapore, according to the statement.
“Reliance should launch towards the end of the year --they have not yet said whether they’ll be doing telecom infrastructure sharing or whether they’re rolling out on their own,” said Shah. “That remains an important factor for launching services.”