Indian operators Bharti Airtel and Reliance Jio Infocomm signed a major infrastructure deal covering cellular towers as well as other backbone infrastructure that could have major implications for other players in the country’s mobile market.
The agreement covers fibre optic networks, submarine cables, cellular towers and internet broadband services and could be extended in the future to include 2G, 3G and 4G roaming.
The new partnership throws up a number of possibilities for how the two partners could cut their network deployment costs, including for 4G which Reliance Jio is currently deploying.
In addition, the deal will set up speculation as to how other leading Indian operators might react.
Earlier this year, Reliance Jio signed a tower-sharing deal with Reliance Communications, a move that was seen as signalling a rapprochement between the feuding Ambani brothers.
According to Financial Times, one industry source said the latest deal was bad for Reliance Communications since linking up with Bharti offered more to Reliance Jio.
But another source, familiar with RCom’s plans, argued there would be no impact because the two deals were complementary and not overlapping.
In addition, such a major infrastructure-sharing deal might lead others such as Vodafone to reappraise their own strategy.
The sharing of infrastructure costs can have a radical impact on operators’ business models. UK research firm Ovum estimates around 40 per cent of opex for mobile operators in emerging markets is spent on national and international backhaul.