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Reliance to invest Rs 100 billion more in IT

BS Corporate Bureau

The Reliance group has decided to scale up its investments in Reliance Infocom to Rs 250 billion from Rs 150 billion over the next 3-5 years.

The additional investment is to include the anticipated fee payable for bagging 18 basic circles already awarded to it, international long distance and domestic long distance telephony forays, international gateways, and fourth cellular licenses, Reliance Industries managing director Anil Ambani said on Monday.

Ambani said the employee strength of Reliance Infocom has been doubled over the last few months to 60,000, so as to make operational select corridors in the national optic fibre backbone, Ambani said.

"If international long distance is opened up by April next year, the idea is to be ready by then," he said.

"There are no plans to increase the basic telecom infrastructure of the project. As of now, Reliance Infocom has invested around Rs 15 billion in implementing the broadband venture connecting 115 cities."

As there are lots of synergies between Reliance Infocom and Reliance Telecom, Ambani did not rule out a possible merger between the two entities at a later stage.

"We have offered a 10 per cent stake to a foreign partner in Reliance Telecom. For a possible merger with Reliance Infocom, we need to buy out the foreign partner in the venture first," he said.

Reliance Infocom is also eyeing a substantial market share in the anticipated Rs 1,000-billion domestic telecom market by 2005. The opening up of the telecom market will help the company spread its wings. "We are also open to bid as a fourth cellular operator in the country to expand our mobile services," Ambani said.

A national roll out of its broadband services is expected during the current fiscal. The fall in international prices of telecom equipments and optic fibre will help the group complete the project at a lower cost.

Reliance Infocom, which will be listed in a domestic/ overseas bourse, has an equity base of Rs 80 billion. Reliance Industries will be the lead investor in Reliance Infocom, and promoters plan to offer 10 per cent stake to its employees through an employee stock option plan.

Reliance Telecom has registered a 170 per cent rise in cellular subscriber base during the last fiscal compared with an industry standard of about 90 per cent. The average revenue per cellular user is over Rs 1,000 per month. "Our cellular operations spanning 13 states are cash positive," Ambani said.

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