Ambani Brothers “Re-Unites” for a Business Deal

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Ambani Brothers “Re-Unites” for a Business Deal

Since the vicious split of Ambani Brothers in 2005, here they re-unites for the first time entering into a Business Deal worth Rs. 1,200 crore that will allow Mukesh Ambani to use Anil Ambani controlled Reliance Communication’s (R-Com) optic fibre network to roll out 4G Services.

According to the agreement, Reliance Jio Infocomm will utilize multiple fibre pairs across RCom’s 120,000 km of inter-city fibre-optic network. This means Reliance Jio will pay around Rs 1 lakh for every km of the network, which is close to a tenth of the cost it would have had to bear to put up its own fibre. Though the deal remains non-exclusive, both the parties are liberal to enter into similar kind of agreement with other firms.

There is even a speculation that ‘Telecom Barron’ approached Mukesh Ambani for a similar kind of deal, but Mukesh Ambani choose to enter into a deal with his younger brother Anil Ambani because Mukesh Ambani and the ‘Telecom Baron’ is in question to be a set competitors in the 4G space.

A source revealed that, Mukesh Ambani could have built a network with his superb execution skills for the spectrum he acquired over two years ago, but it didn’t make any sense as Anil’s Reliance Communications’ network was already in place.

Though before, when the two brothers has a split, they signed a non-compete agreement as part of their settlement where they were not authorized to get into each other’s businesses. But after it got ended in May 2010, Mukesh Ambani entered into the telecom sector by buying over 95 per cent stake in Infotel Broadband.

This deal is to be considered a Win-Win deal for both the companies as where Reliance Jio Infocomm gets a ready infrastructure at tenth of the cost it would have spent building its own infra, R-Com gets a much needed raise in stock market by 11%, as recorded by Tuesday. According to analysts, partnership of chairman Anil Ambani with his elder brother Mukesh Ambani would have many fold effects on the stock and the company in future. Also it adds that any cash flow in both the companies would not just affect R-Com stock but Reliance Jio Infocomm stocks as well. Moreover it says that, this deal would upsurge the possibility for R-Com telecom tower infrastructure to recover it from its current debt.

Reliance Jio Infocomm is expected to launch its first-phase services in Delhi, Mumbai and Jamnagar by the end of this year, where both Reliance Jio Infocomm and R-Com will set up joint working teams to implement the deal.

It is said that the deal that actually got confirmed on Tuesday actually got elicited early this year, when in January, Mukesh threw a party to celebrate the wedding of his niece Nayantara (daughter of sister Nina Kothari) at his 27-storeyed residence Antilla. It was here that the two brothers discussed coming together for business purposes.

Significantly, this agreement carries a symbolic merge between two groups giving rise to the speculations of their merge in banking sector as well in the near future, but it is not confirmed yet.

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