http://timesofindia.indiatimes.com/...5bn-for-telecom-foray/articleshow/6044892.cms
Big splash: RIL readies $5bn for telecom foray
PTI, Jun 14, 2010, 03.20am IST
NEW DELHI: Mukesh Ambani-led RIL's foray into the telecom sector will entail an investment of about $5 billion, for which it is open to sharing infrastructure of younger brother Anil's group firm Reliance Communications, company officials said.
The flagship firm of Ambani, who is known for making ultra-mega projects, would invest about a billion dollars for rolling out broadband services to attain a target of 100 million subscribers through the just acquired Infotel in five years, RIL top officials told analysts last night.
RIL acquired Infotel for Rs 4,800 crore on the day the Nahata group firm emerged as the sole player to have bid successfully for all-India spectrum at the end of the 16-day-long auction conducted by the government on Friday.
Apart from this, the cash-rich RIL will have to pay Rs 12,872 crore to the government as the licence fee for spectrum bagged by Infotel, which would become the subsidiary of the Mukesh Ambani group's flagship company. Asked if it could tie up with Anil Ambani-led RCOM for infrastructure, including optic fibre and towers, RIL top executive Manoj Modi and chief financial officer Alok Agarwal said that broadband infrastructure could be shared with any of the existing players.
Replying to a specific query on whether RIL also intends to acquire any 2G telecom player for voice telephony, Modi said: "RIL will not acquire any 2G player," thus ending speculation about the company's interest in Videocon Mobile, a Venugopal Dhoot group firm that acquired licences for 22 circles in 2008. Incidentally, the second largest largest telecom player, RCOM, bagged the highest number of circles along with Bharti Airtel for the 3G licence auction, which concluded recently.
The officials said the total investment, including the acquisition of a 95% stake in Infotel, which would be a subsidiary of RIL, would come to around Rs 22,000 crore and the endeavour would be to revolutionise and popularise broadband services at an affordable price. Mukesh, along with Manoj Modi, had created Reliance Communications, but the company — now known as RCOM — had gone to Anil Ambani as part of the family settlement to divide the Reliance Empire.
The officials told analysts that even for devices like notepads and laptops, arrangements would be made with existing players to ensure that customers get the full services. Last week, RIL entered the telecom arena, hitherto forbidden to it, by announcing the Rs 4,800 crore acquisition of Infotel, promoted by the Mahendra Nahata group.
The deal followed a truce arrived at between Mukesh and Anil, on May 23, wherein the warring brothers scrapped a non-compete agreement to allow each other business flexibility.