Rcom-RJio ‘virtual merger’ to double competition

28 Sep 2016


It is competition doubled for incumbent operators with Reliance Communications (RCom) and Reliance Jio (RJio) achieving a ''virtual merger'' of their businesses by combining infrastructure, including spectrum and towers, to reap synergies.

Mukesh (Left) and Anil AmbaniAnil Ambani , chairman of the Reliance Anil Dhirubhai Ambani Group (R-ADAG),  said on Tuesday the merger was already in the works given the two entities are sharing spectrum, network, fibre and towers

The younger Ambani said he was working with his brother Mukesh Ambani to realise their father's dream and Reliance Communications' association with Mukesh-led Reliance Jio has accomplished a virtual merger.

He was addressing shareholders at the annual general meetings of RCom, Reliance Infrastructure Reliance Power, Reliance Communications and Reliance Capital.

Ambani also said the company already has the spectrum it needed for 2G, 3G and 4G, plus spectrum trading and sharing with Jio. This will be beefed up further once the merger is complete.

''We have accomplished a virtual merger between RJio and RCom. Our spectrum is shared, our network is shared, our fibre is shared, our towers are shared, our voice is shared and every effort to be capital light has been achieved,'' Reliance Group chairman Anil Ambani said replying to shareholders' at the company's AGM in Mumbai.

''We have a full 4G network on a pan-India basis without any capital expenditure on RCom's balance sheet,'' Ambani said, fielding shareholders' queries at the company's AGM.

RJio and RCom had earlier entered into spectrum sharing across 17 circles and trading in 10 circles and infrastructure sharing. In 2005, the brothers had split following a feud and decided to go separate paths, after carving up of the Reliance Group between them.

Mukesh won control of oil and gas, petrochemicals, refining and manufacturing, while Anil took over electricity, telecom and financial services (ADAG gets control of four de-merged companies). Anil Ambani also said that both he and his elder brother Mukesh Ambani are ''two brothers working relentlessly to fulfill the dream of Dhirubhai Ambani', the founder of the Reliance Group.

''There are two committed brothers - Mukesh Ambani and Anil Ambani - both working relentlessly to fulfill the dream of Dhirubhai Ambani,'' he added.

The virtual merger is helping RCom reduce its debt, while other initiatives such as sale of telecom towers are also underway. The sale of towers would be announced in the coming months, Ambani told shareholders.

The virtual merger has resulted in RCom getting a ''full 4G network'' on a pan-India basis without any capex on its balance sheet, giving it the ability to offer world class 4G services.

RCom now has more than 1 million paid 4G customers within 90 days of launch, who are using more than 1 GB data monthly.

The company is also targeting to pare its by 75 per cent over the next one year, which stands at about Rs 40,000 crore.

''With the virtual merger, we have eliminated the need for capital expenditure for rolling out 4G network,'' younger Ambani said, adding the firm also already added 1 million 4G users since its launch 90 days ago.

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