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India's Ambani brothers sign $2.1 bn telecoms deal

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(Globalpost/GlobalPost)

India's billionaire Ambani brothers announced Friday a $2.1-billion deal to share telecom tower infrastructure, cementing a reconciliation between the once-warring siblings.

The agreement is the another tangible sign that the two are patching up relations since their bitter fight for control of Reliance erupted after their rags-to-riches father, Dhirubhai, died in 2002 without leaving a will.

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 the latter's telecom tower equipment, a joint statement said.

The move will help Reliance Industries to accelerate the roll-out of its long-awaited high-speed fourth generation (4G) telecom services, the companies said.

The aggregate value of the deal is more than 120 billion rupees ($2.1 billion) for the duration of the agreement, which was not specified, the statement added.

"Under the terms of the agreement, Reliance Jio Infocomm will utilise up to 45,000 ground and rooftop-based towers across RCom's nation-wide network for accelerated roll-out of its state-of-the-art 4G services," the firms said.

In April, the two firms signed a $220 million deal to share their fibre-optic communications networks.

The latest agreement also allows the two companies to jointly build more towers at new locations, they said.

"The deal is positive for RCom, to help it reduce its debt over a longer-term," Ankita Somani, analyst at Mumbai's Angel Broking, told AFP

RCom has been staggering under a debt of more than $6 billion.

Reliance rose 0.55 percent to 796.65 rupees while RCom was down 1.1 percent at 116.75 rupees, after a sharp recent rally Friday.

The brothers have been increasing their corporate collaboration since they publicly signalled the end of their dispute with a joint appearance in December 2011 to dedicate a memorial to their late father in his home town of Chorwad, in western Gujarat state.

Their mother declared at that time: "There is love between the brothers", after their feud to control the Reliance group, then India's most valuable listed company, ended with them splitting the empire.

Even after they broke up Reliance, the brothers kept battling, fuelled by differences over a 2005 family-brokered deal to share resources from India's largest gas field.

But after a Supreme Court ruling in Mukesh Ambani's favour, the brothers dropped their legal cases against each other.

When they announced the truce, they also scrapped an agreement not to compete in each others' sectors -- which analysts say has given them far greater operational and financial flexibility.

The announcement of the tie-up comes a day after Mukesh Ambani's Reliance Industries announced plans to invest $26 billion in its businesses over the next three years.

Mukesh Anani, India's wealthiest man, has expanded from oil and gas into the fast-growing broadband and retail segments in recent years.

Ambani was confident over the expansion of broadband services through group subsidiary Reliance Jio Infocomm, which plans to roll out its high-speed fourth-generation (4G) telecom services later this year.

Reliance Jio, which acquired the 4G airwaves almost three years ago, is the lone Indian company with a pan-India permit for 4G services.

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Reliance Industries

Reliance Communications

http://www.globalpost.com/dispatch/news/afp/130607/indias-ambani-brothers-sign-21-bn-telecoms-deal-0