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Mukesh-Anil patch-up: Beyond the brotherhood

Mukesh Ambani's Reliance Jio Infocomm has inked a deal worth Rs 1,200 crore with younger brother Anil's Reliance Communications. This is the first business tie-up between the estranged brothers after they tried to reconcile their differences in December 2011.

Suman Layak | April 3, 2013 | Updated 08:59 IST

Suman Layak
In December 2011, at their ancestral village Chorwad in Gujarat, estranged brothers Mukesh and Anil Ambani came together to try and iron out their differences, reconcile their business interests and rebuild family bonds.

The first concrete step in that direction has been taken after 15 months. The two Reliance Groups have announced their first business tie-up - they will use each other's fibre optic telecom network.

Reliance Jio Infocomm, the newly renamed Reliance Infotel broadband company promoted by Mukesh Ambani, will pay Rs 1,200 crore as one-time payment to get the 'indefeasible' rights to use the inter-city fibre optic network of brother Anil's Reliance Communications, says a Reliance Communications press release.

It adds that this is the first among other similar agreements being worked upon by the two sides. Among them is Reliance Jio getting the rights to use the telecom tower network of the Anil Ambani-controlled Reliance Infratel. Reliance Communications will also have some rights over any network Reliance Jio may set up in future.

Such agreements are crucial for Mukesh, who, despite his keenness, could not be the first to launch 4G broadband services in India. Bharti Airtel beat him to it. With Bharti offering voice and 4G data together, it is important for Mukesh to be able to offer the same on Reliance Jio.

But Reliance Jio, a newcomer in the field, has no network or voice service of its own. A tie-up with Reliance Communications, however, opens up a lot of possibilities.

Besides, such tie-ups could well go beyond telecom. There are natural synergies between the businesses of the two brothers - such as Anil's Reliance Power and Mukesh's Reliance Industries, which deals in energy.

However, the 15-month gap between the photo-op at Chorwad and the signing of the first agreement on Tuesday, suggests it will be hard-bargaining all the way.

But in a year that will surely see muted growth and pressures on profitability, shareholders may well prefer such bargaining to the brothers' growing fraternal spirit.

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