)
They might be locking horns in the 4G long-term evolution (LTE) space soon. Nonetheless, Mukesh Ambani-controlled Reliance Jio Infocomm today signed an agreement with Bharti Airtel; under the pact, Reliance Jio Infocomm would have exclusive right to use Bharti’s 3,100-km submarine cable i2i connecting Chennai to Singapore.
With a capacity of 8.4 terra bits per second (tbps), Reliance would use one of the eight fibre pairs in the cable. The capacity is substantial, considering the fact that one tbps, according to experts, can support 250,000 units of high definition video conferencing simultaneously across the country. However, the capacity is in consonance with its strategy to bank on high-speed data for launching 4G LTE services.
According to a joint press release, the cable would give Reliance “direct access and ultra-fast connectivity to major hubs across Asia-Pacific” and help the “operator to meet the bandwidth demand and provide ultra-fast data experience to its customers”. (TELECOM BLUEPRINT)
The move is the first of a series of agreements Reliance would sign to secure international connectivity for its telecom venture. Some senior executives in the business say a deal of this kind could be worth about $25 million. Reliance and Bharti declined to comment on the numbers.
The cable joint venture between Singapore Telecom and Bharti started selling capacity in 2003. In 2007, Bharti became its sole owner.
With four submarine cables between India and Singapore, there is huge capacity available on the route. Experts said while the total capacity on this route is about 30 tbps, current usage is lower than one tbps. Experts said from Singapore, Reliance Jio would also have to connect to the US, and this could be through Hong Kong and Japan. “Currently, there are five cables that connect Singapore to the US. Only 0.3 per cent of the world wide web content is hosted in Singapore, while 90 per cent is in the US. So, connectivity to Singapore alone does not help,” said the chief executive of a competing submarine cable company.
Experts added Reliance would also need connectivity from India to Europe, and in this route, too, there is large capacity — about 30 tbps. Apart from cables set up by consortiums Anil Ambani-controlled Reliance Globalcom has connectivity to the US through West Asia.
A few weeks earlier, Reliance Jio had struck a deal with Reliance Communications to use its inter-city fibre optic network for a one-time payment of ~1,200 crore. It is also in the final stages of negotiations to share Reliance Communications’ towers (about 56,000) across the country, as well as its large capacity of intra-city fibre optics cables. These steps would enable faster rollout for Reliance Jio and help it save costs.
In 2005, Tata Communications had bought a cable network that gave the company a linkage between Chennai and Singapore. Now, it has extended the connectivity to the US as well.
Rishi Tejpal, principal research at Gartner, says, “Bharti has a submarine cable capacity which is not fully utilised and Reliance can access this without laying its network. This might not have any immediate impact, but the deal is future-proof.”
The stock markets did not warm up to the development. The Bharti Airtel stock closed at Rs 299.4, a fall of 0.4 per cent, after falling about a per cent in intra-day trade. The Reliance Industries stock rose 1.7 per cent to close at Rs 803.5. In intra-day trade, the Reliance Communications stock shed about five per cent; it closed at Rs 94.5, down 3.2 per cent.
The deal surprised a few analysts. “Tying up for global data transit so soon, when the company hasn’t launched the service in India, is not understandable. And, to do this choosing Bharti as a partner for data transit is surprising, especially as to offer such a service, you need not just the infrastructure, but support on software, hardware and other add-on support as well. As far as I understand, Bharti is a small player in this,” said Daryl Philip, senior telecom analyst, Finquest.
