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Without getting into the dynamics of the deal between Reliance Industries and Bharti Airtel, one reason the deal with RCom could not be struck is because it does not offer a direct submarine cable network of its own to connect to Singapore. It has a third party arrangement connecting to Singapore, which would have made the option expensive for Reliance Industries.
The deal between Bharti and Reliance Jio Infocomm is to connect its proposed 4G network to the Asia-Pacific region through the former’s undersea cable network. Interestingly both companies in their release said that they will continue to build on this strategic framework. The tie-up will lead to Bharti being able to sweat its idle assets and RIL saving on time and money on setting up the infrastructure required for connecting to Asia-Pacific.
This deal does not mean that RIL will not be utilising RCom’s sub-sea services. Reliance Globalcom, an RCom division, which controls Flag Telecom, has 68,000 route km of sub-sea cable assets with presence in emerging and developed market like the US, Europe, West Asia, India and China. The network lands at 46 locations in 26 countries and its network accounts for 63 per cent of global data. Importantly, only 10 per cent of its designed capacity is utilised.
More than the monetary benefits, the deal opens doors to end the bitter rivalry between the two groups (RIL-Bharti) which started in year 2000 over CDMA issues. The deal once again highlights that good sense prevails over other considerations when it comes to running businesses. The deal is a win-win for the industry as a whole and for consumers too who would be able to access cheaper services.
