Reliance Communications (RCom), India’s foremost and truly integrated telecommunications service provider, has entered into a long-term strategic telecom infrastructure sharing agreement with Etisalat Telecom. The agreement will accelerate Etisalat forthcoming launch of telecom services in India. You may recall, Swan Telecom once rumored to be backed by the Ambani holds the Unified Access Service license for wireless operations, roped in Etisalat by divesting 45% stake in favor of the latter.
Under the terms of the agreement, Etisalat DB Telecom and its subsidiary would outsource their telecom infrastructure requirements for 15 circles, encompassing end-to-end tower and transmission infrastructure to Reliance Infratel and Reliance Communications.
This agreement will offer large cost optimization benefits with an asset light model, improvement in capital productivity and enhances RCom’s revenues by Rs 10,000 crore. This agreement is first of its kind that includes Towers and Transmission agreement in the Indian telecom landscape and strongly complements Etisalat DB Telecom’s plans for India.
Etisalat DB Telecom has built state-of-the-art telecom infrastructure across Asia, Middle East and Africa. The company offers fixed line services over The Next Generation Network and enables mobile users with a range of services and applications such as GPRS, 3G, 3.5G, 3.75G, Blackberry, iPhone, MobileCam and others. Globally, Etisalat has roaming agreements with 520 operators.
Reliance Communications offers comprehensive telecom infrastructure sharing services including tower infrastructure, transmission connectivity to the telecom sites, bandwidth/fibre options, domestic and international long distance carriage services, collocation of BSC and other core network equipments.
Update: End to End Transmission is using the BTS to BTS transmission connectivity in 15 circles where Etisalat has been awarded licenses. Etisalat will only install their 2G Transceivers for last mile Wireless connectivity to subscribers. Indeed, first of its kind deal. This means, one can lease the entire fiber of RCom on PAN India basis for less than Rs 1,000 crore / year. But Swan Telecom / Dynamix Balwas Group is believed to be a Shell Front End company of Anil Ambani, any info ?
Either Reliance Communications is too dumb to understand the gravity of what’s going on or they are simply ignoring the facts. I dont understand why they have not responded to so many questions about their revenue numbers or the audit issue and are instead scorching on such deals. Is it because they want to pull the attention away from something that they dont have an answer for or are they trying to hide something?
For the last Seven Quarters starting 30th June, 2007 and ending 31st December, 2008, the numbers for RCom and its peers tell the following tale:
Reliance Communications
% change in subscribers over seven quarters 96%
% change in revenues over seven quarters 5%
TTSL
% change in subscribers over seven quarters 81%
% change in revenues over seven quarters 23%
Bharti Airtel
% change in subscribers over seven quarters 104%
% change in revenues over seven quarters 63%
Vodafone Essar
% change in subscribers over seven quarters 102%
% change in revenues over seven quarters 56%
Idea Cellular
% change in subscribers over seven quarters 127%
% change in revenues over seven quarters 68%
One of the most dominant players in the Telecom sector is showing a increase in subscriber base of 96%, but a corresponding change in revenue of only 5%, when peers have an increase in revenue of as much as 4 times. Apert from this, there is the audit issue by TRAI and discrepancy between numbers reported to TRAI vs Annual Report which is close to Rs 7000 crore.
Nitin:
Show me one company where Ambanis are operating transparently 🙂 Reason for poor revenues was the GSM CAPEX. And in the next 2 years they will face 3G CAPEX and hence EPS is expected to go down. Not to forget the new operators cannibalization of ARPUs, Airtel will be more affected than RCom.