Reliance's Ambani brothers team up on 4G services rollout

Reliance Industries has the spectrum, while Reliance Communications owns the fiber-optic network

Reliance Industries and Reliance Communications are sharing infrastructure for the rollout of 4G services in India, apparently ending a dispute between the two Ambani brothers who head the companies.

Reliance Industries, which previously acquired 4G licenses and spectrum in 22 service areas, will pay 12 billion Indian rupees (US$219 million) to share intercity fiber-optic infrastructure built by Reliance Communications, which operates mobile telephony and broadband communications services in the country.

Relations between the brothers, Mukesh Ambani, chairman and managing director of Reliance Industries, and Anil Ambani, chairman of Reliance Communications, have been bitter previously, leading Reliance Industries to scupper a proposed merger in 2008 of Reliance Communications with MTN Group in South Africa. The negotiations ran into legal threats from Reliance Industries, which claimed that it had the right of first refusal to any disposal of the controlling stake in Reliance Communications.

Reliance Industries acquired in 2010 a 95 percent stake in Infotel Broadband Services , which had won licenses for broadband wireless services in the country. The brothers had scrapped a month earlier an agreement not to compete in a number of businesses.

Under the deal announced Tuesday, Reliance Communications will provide Reliance Jio Infocomm, a unit of Reliance Industries, access to its 120,000 kilometer fiber-optic network. Reliance Communications will in turn have access to the fiber-optic network being laid out by Reliance Jio. The deal is described as the first step in cooperation between the two companies to optimize the utilization of their infrastructure.

The entry of Reliance Industries, a large private company in country, into the 4G market could shake up an industry that is already facing losses and is undercapitalized after huge tariff wars and rising government regulation, analysts said.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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