Telecom Analyst, Kunal Bajaj believes Reliance Communication's deal with Reliance Jio Infocomm, Reliance Industries' 4G telecom arm will help accelerate the 4G rollout.
Reliance Jio Infocomm and Anil Ambani owned Reliance Communications today struck a Rs 1,200 crore deal for sharing the later's nationwide fibre optic network. Under the terms of the agreement, Reliance Jio will utilise multiple fibre pairs across RCom's 1,20,000 kms inter-city fibre optic network for rolling out its 4G services, it said on Tuesday. RCom will inturn have reciprocal access to optic fibre infrastructure to be built by Reliance Jio in the future.
"From a 4G rollout perspective, this will go a long way in enhancing the ability for Jio to rollout very quickly. If they had decided to try and build all their own towers from scratch, it would have taken years and just acquiring those heights would have been impossible," adds Bajaj in an interview to CNBC-TV18.
Below is the edited transcript of Bajaj's interview to CNBC-TV18.
Q: What have you made of the deal announced by the two Ambani's?
A: This is probably something which has been in the making for quite some time. From very early days when Mukesh Ambani announced that he would be buying into Infocomm and re-entering the telecom space, we knew that in order to make a proper 4G investment and an a proper 4G network, one would need access to all the infrastructure. Because of the complimentary skills that the two companies bring to the table, it makes a complete sense for Jio to be partnering with RComm to get access to the infrastructure that its tying up to get access to.
Q: One of the key issues is the terms that are likely to be put in place for the sharing of the tower infrastructure. That is perhaps the key piece in this play. No details are available but the number is around 1.2 lakh towers. So what does this tell you about the intentions of Reliance Jio in terms of its launch?
A: The tower numbers are quite significant and Reliance Communications towers business is one of the largest in the country as compared to the other teleco's who have standalone tower units. From a 4G rollout perspective, this will go a long way in enhancing the ability for Jio to rollout very quickly. If they had decided to try and build all their own towers from scratch, it would have taken years and just acquiring those heights would have been impossible.
However, the 1.2 lakh towers that Reliance Communications has today are certainly not going to be sufficient. Therefore, just like the agreement for optic fibre, talks about Reliance Communications getting access to fibre when Jio builds it will need to be redone.
The number of towers, particularly in dense urban areas is not going to be sufficient for 4G Long Term Evolution (LTE) type of coverage, particularly when you are talking about over 2MHz band. So, you will need much more density of towers than what Reliance Communications even has today. However, this is definitely a good start to be able to accelerate the rollout.
Q: In terms of the final eventual possibilities, do you ever expect the front-end to be common and possibly the devices to be sold through one common unified platform?
A: From a technology perspective, long-term evolution (LTE) in the rest of the world has always been one part of a multi-technology solution. Nowhere in the world are we seeing a 4G LTE only type of network being rolled out. So, certainly this implies that this is probably along the same line that the Ambani brothers are thinking in India as well.
4G is very good for providing very high capacity coverage, very high capacity throughout in very dense areas. However, the incentives are getting out of those very dense areas. It is very difficult to achieve the same level of reliability and coverage that one can get from a 3G or 2G type of connectivity.