India's billionaire Ambani brothers, who fought a very public feud for spoils of their father's business empire, signed Tuesday a $220-million deal in the first tangible sign of a corporate reconciliation.
Reliance Jio Infocomm, the telecom unit of Mukesh Ambani-led Reliance Industries, signed the agreement with Reliance Communications, the flagship firm of the Anil Ambani group, to share their fibre-optic communications networks.
The long rumoured pact is the "first in an intended comprehensive framework of business co-operation" between Reliance Jio and RCom, to use each other's infrastructure across Indian cities, the companies said.
This will provide "optimal utilisation of existing and future infrastructure of both companies on a reciprocal basis", they added in separate but identical statements.
There have been increasing signs of a warming of ties between the brothers since their fight for control of Reliance erupted after their rags-to-riches father, Dhirubhai, died in 2002 without leaving a will.
"It is a positive sign that the brothers are keen to work together," said a fund manager with a state-run brokerage firm, who asked to remain unnamed.
The pair ended up splitting the Reliance group left by their father that was India's most valuable listed company.
After a protracted court case that saw their mother, Kokilaben, act as peacemaker, the brothers agreed to bury the hatchet and tear up a non-competition agreement that prevented them from entering the same sectors.
In 2011, Mukesh and Anil came together to dedicate a memorial to their father, and their mother declared the enmity over, telling reporters: "There is love between the brothers."
Tuesday's agreement, while small in value, was the first tangible evidence of an end to the business rift between Mukesh, India's wealthiest man, and his younger sibling Anil.
News of the agreement heightened speculation among analysts about further collaboration between the brothers as well as about a possible merger of the two Reliance telecom companies.
RCom's shares leapt as much as 17.2 percent to a high of 66.9 rupees after the news before retracing some of their gains to close up nearly 11 percent at 63.3 rupees. Mukesh Ambani's Reliance Jio is unlisted.
The deal will help Reliance Jio Infocomm roll out its high-speed fourth-generation (4G) services. Mukesh Ambani is planning to establish an ultra-fast 4G telecommunications carrier later in 2013.
Analysts say sharing fibre-optic networks and other infrastructure such as telecom towers could prove mutually beneficial by helping Mukesh reduce costs at the same time as boosting the fortunes of Anil's debt-laden group.
RCom will have reciprocal access to the optic fibre infrastructure which Reliance Jio will build in the future, the companies said.
"Both brothers have a presence in telecom. Their working together makes sense at a time when the cost of doing business is high and the economic environment is tough," said Sonam Udasi, head of research with IDBI Capital.