New Delhi: Bharti Airtel will share part of its submarine cable network with Reliance Industries' telecom arm, a rare partnership between two firms not known for their camaraderie.
The country's largest telco will provide Reliance Jio Infocomm data capacity on its undersea cable that links India and Singapore, enabling the Mukesh Ambani-owned venture to connect its proposed 4G network to the Asia-Pacific region.
The old rivals also held out the intriguing possibility of greater cooperation in the future. "Bharti and Reliance Jio will continue to build on this strategic framework and consider other mutual areas of cooperation and development to leverage their respective assets towards offering their customers a much richer experience," said a statement issued by both the companies, without specifying what these areas could be.
Two executives aware of the development said Bharti and Reliance were in discussions for an optic fibre-sharing deal that could be similar to the recent agreement between Reliance Jio Infocomm and Anil Ambani's Reliance Communications. Both Bharti and RIL declined comment on this.
Tuesday's pact marks a break in a narrative of rivalry between the two companies dating back to the early 2000s.
Analytsts welcome connectivity agreement
In the early 2000s, Bharti and Reliance Industries fought a lengthy battle over allowing CDMA operators to offer full-fledged mobile services.
This was followed by a period of truce as the ownership of RIL's telecom business was transferred to Anil Ambani as part of the family settlement of 2005.
But RIL's ambitious re-entry into the telecom sector has reignited the old rivalry, with analysts anticipating a dramatic confrontation both within and outside the marketplace between the country's largest private company and the largest telecom company.
The two groups also compete against each other in retail. RIL's retail business crossed the Rs 10,000-crore revenue mark in 2012-13. While Bharti is a much smaller player in this business, the group is expected to grow it aggressively along with partner Walmart, now that the government has allowed foreign investments in the sector.
Analysts were quick to welcome the data connectivity agreement between the two. "Such deals are good from the industry point of view as they result in sharing of infrastructure, which is costly to build. It is a part of industry consolidation and could be a win-win for all, including the ultimate consumer," said Hemant Joshi, partner, Deloitte Haskins & Sells.
Executives close to Bharti said the company had a history of sharing infrastructure with competitors. They point out the company had taken the initiative to merge its towers with those of Vodafone and Idea to form Indus Towers.
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