* Reliance Industries to use Reliance Comms fibre optics
* Companies say deal first in planned co-operation
* Reliance Communications stock zooms
* Other Anil Ambani stocks also rise
(Adds analyst comments, details)
By Devidutta Tripathy and Aradhana Aravindan
NEW DELHI/MUMBAI, April 2 India's billionaire
Ambani brothers will share a fibre optic network for their rival
telecoms companies, their first business tie-up since ending a
long-running feud three years ago.
Reliance Industries, controlled by Mukesh Ambani,
India's richest person, will pay 12 billion rupees ($221
million) to younger brother Anil Ambani's Reliance
Communications for use of its fibre optic network.
The companies said on Tuesday they could co-operate further
in future and the announcement bolstered their share prices.
Reliance Industries, whose main business is petrochemicals,
made a dramatic return to telecoms in 2010 by becoming the only
company to gain nationwide 4G airwaves. While it has yet to
start services, it is widely expected to begin operations in
parts of India later this year.
Debt-laden Reliance Communications, India's third-largest
cellular carrier by users, was hived off from the combined
Reliance empire after the brothers split up the family
businesses in 2005 in a deal brokered by their mother.
Under the terms of Tuesday's fibre optic deal, Reliance
Industries will pay "one time indefeasible right to use (IRU)
fees for sharing RCOM's nationwide inter-city fibre optic
network infrastructure," the companies said.
Reliance Communications shares jumped as much as 17 percent
after the news before closing 11 percent higher. Other Anil
Ambani group stocks also gained. Reliance Industries' stock
closed up 2 percent.
Further details on the tie-up were not immediately
available, but the companies indicated more cooperation was
possible. Media reports have long speculated that Reliance
Industries would lease space on Reliance Communications' tower
network or buy an equity stake in the tower business.
"This agreement is the first in an intended comprehensive
framework of business co-operation ... for optimal utilisation
of the existing and future infrastructure of both companies on
reciprocal basis, including inter alia, inter-city fibre,
intra-city fibre, towers and related assets," the companies
Reliance Communications is the most leveraged among Indian
cellular carriers with net debt of nearly $7 billion, or more
than five times its annualised operating profit. The company has
been looking to sell assets to cut its debt load but has fallen
short in several attempts.
"It is definitely a relief for Reliance Communications, and
a relief coming to the group after a long, long time even though
not sufficiently large," said Jagannadham Thunuguntla,
strategist at SMC Global Securities in New Delhi.
Tuesday's deal will help Reliance Jio Infocomm "reach the
market faster," said Deven Choksey, managing director of K.R.
Choksey Securities in Mumbai.
According to Forbes, Mukesh Ambani is worth $21.5 billion,
while Anil Ambani is worth $5.2 billion.
Dhirubhai Ambani's death in 2002 led to a power struggle
between his two sons that split the Reliance empire. Mukesh
ended up with the core energy business, and Anil ended up with
the telecoms, financial services and power businesses.
($1 = 54.3500 Indian rupees)
(Reporting by Devidutta Tripathy and Aradhana Aravindan;
Editing by Tony Munroe/Ruth Pitchford)