India's Ambani brothers move past feud with telecom pact

Tue Apr 2, 2013 10:06am EDT
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By Devidutta Tripathy and Aradhana Aravindan

NEW DELHI/MUMBAI (Reuters) - India's billionaire Ambani brothers will share a fiber optic network for their rival telecoms companies, their first business tie-up since ending a long-running feud three years ago.

Reliance Industries (RELI.NS: Quote), controlled by Mukesh Ambani, India's richest person, will pay 12 billion rupees ($221 million) to younger brother Anil Ambani's Reliance Communications (RLCM.NS: Quote) for use of its fiber 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 fiber optic deal, Reliance Industries will pay "one time indefeasible right to use (IRU) fees for sharing RCOM's nationwide inter-city fiber 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.

MORE CO-OPERATION   Continued...

Mukesh Ambani (R), chairman of Reliance Industries, and his brother Anil Ambani, chairman of Reliance Group, attend the inauguration ceremony of the Vibrant Gujarat global investor summit at Gandhinagar in the western Indian state of Gujarat January 11, 2013. REUTERS/Amit Dave