Reliance Communications and Reliance Jio Infocomm Telecom Tower Sharing Deal was expected to happen but the amount at which the deal has happened and the unanswered questions comes as a surprise to many of us. Like in the previous RCom-Reliance Jio Inter City OFC Sharing Deal which happened at 50% discount to the market price, the current Deal of RCom leasing space for Reliance Jio on 45,000 Telecom Towers has also happened at least 50% discount to market prices.
After running through various reports, news sources and arrogant managers of both the Reliance Group companies, the internal details of the deal is as follows,
RCom will share 45,000 Towers [Existing or New Ones] and they have to be Optimized the 2.6GHz Microwave Relay of Reliance Jio [Read that Tower Mast Height must be Raised by RCom]
We tried to get clarification on the Number of Years of deferred Payment involved in the deal, but no answer yet. Assuming for the balance life of the BWA / LTE spectrum of Reliance Jio, which is 17 years, the rent comes to ~ Rs13,070 per tower per month. Prevailing Tower Rentals on a conservative basis is definitely between Rs25,000 to Rs30,000.
If You Reduce the Number of Years in the Deal to say 15 Years, the Rent comes to ~Rs15,000 per tower per month. If You Further Reduce the Number of Years in the Deal to say 10 Years, the Rent comes to ~Rs22,000 per tower per month. In any case it is at is at ~50% discount to Bharti Infratel’s per tower per month rent of ~Rs35,000.
Why the Reliance Tower Sharing Deal has Happened at Discount ?
One Insider Source from whom I am picking up says that there is a reciprocal arrangement on sharing enhanced OFC Capacities in Future and the discount provided by RCom now will be given as a benefit later. Going by the Ambani Family Track record, I’d not rule out some other mutually acceptable arrangement, like Offshore account transfer between the two 😉
I fail to understand why the self claimed professional management of Reliance is silent on the deal [Citing Competition in this circumstance is not acceptable as this is a shady practice.] With Corrupt Regulator, SEBI not empowering shareholders, I don’t think we can expect anything more.
RCom – Reliance Jio deal is a special case where a large buyer squeezing a seller desperate for cash and I do not see the same impacting the market rentals. RCom is unlikely to extend such rates in smaller deals and there are no meaningful large tower
tenancy deals in the market.