Jio, which was virtually the sole tenant of RCom’s 43,000 towers already as part of a 10-year deal which it had signed earlier, now will become the sole owner of the assets. The deal will not only make Jio the second largest tower owner in the country with over 143,000 towers in its kitty (Jio already has 100,000 towers of its own), it will help the company deepen its 4G coverage and take on Bharti Airtel
more effectively, another source pointed out. That may enable Jio to get closer to its target of acquiring another 100 million customers in the next 12 months, according to experts close to the company.
Winning the towers was crucial, say analysts, as Jio would not have liked the RCom tower business to be under the control of a competitor or an independent tower company which would have looked for other tenants. Jio’s strategy has been not to share towers with competitors from the very beginning. Analysts also point out that the company had put in smaller towers but their capacity with the onslaught of data usage is very limited. On a later date, Jio may even think of monetising the towers once its business has stabilized, according to analysts.
On the other hand, Sunil Mittal’s Bharti Group, through Bharti Infratel and through their 42 per cent stake in Indus Towers, effectively has economic interest in over 90,000 towers. However, if there’s a restructuring of the business under which Indus Towers will merge with Bharti Infratel (with Infra buying out the stakes of Vodafone and Idea), Bharti will have over 170,000 towers under its belt. There are indications that Bharti could reduce its holding in Bharti Infratel to a minority stake as part of its monetization plan.
For Jio buying out the crucial 850 Mhz and 900 Mhz spectrum, which it got partly from MTS and partly through auction, makes sense because it expires only around 2033. That will give Jio stability and is crucial for taking the growing pressure of 4G data and expanding customer base, analysts say.
Analysts say that Jio has bought over 98 Mhz of spectrum in 1800 and 2100 MHz bands as well. In an auction, it would have cost the company over Rs 7,000 crore, they argue. However, it is not known what value they have imputed to this sale. They also point out that losing this spectrum to a rival like Airtel or Vodafone would have impacted Jio’s aggressive customer acquisition strategy and data push.