Ambani is back with his second $10-billion telecom foray to offer bundled voice and data services in the country. And his emotional attachment with Reliance Infocomm is reflected in the name of his latest venture, Reliance Jio Infocomm — more than a hint that he wanted his first telecom baby to survive (Jio).
Ambani is ready to roll out 4G services later this year, most likely on December 28, the birth anniversary of his father and Reliance founder, the late Dhirubhai Ambani. However , the company may launch a pilot a little earlier for testing purposes, said sources in the know. RILdeclined to comment for the story.
The ambitious project is expected to roll out in three phases — starting with Delhi & Mumbai later this year, followed by 69 cities by 2014 and over 800 cities by early 2015.
One lakh towers
After exploring different possibilities , RIL has finally decided to set up over 1 lakh telecom towers on its own, moving away from its earlier asset-light strategy. The low-emission towers will look different from the existing ones in the country with entire equipment installed inside it.
The towers, which cost a little over Rs 1 lakh each, are expected to be manufactured by Himachal Futuristic Communications, in which Reliance Industries (RIL) holds a stake, while a part of it may be outsourced, said another source in the know. The company has sought permission from the Navi Mumbai Municipal Corporation to install towers in the satellite city.
Back in the game
Ambani had surprised everyone when he bought a 95% stake in Infotel Broadband Services for Rs 4,800 crore in June 2010, a few days after the Mahendra Nahata-promoted company successfully bid for a pan-India BWA licence. Within three years, the government allowed BWA holders to offer voice services by just paying an additional Rs1,680 crore. However, the Cellular Operators' Association of India has accused the government of providing "undue benefit" to RIL by changing the rules midway and allowing BWA players to offer voice services — which account for over 85% of telcos' revenues.
Core team
Besides Mukesh Ambani and his confidant Manoj Modi, the core team for RIL's telecom foray includes Jotindra Thakkar, the procurement in-charge and a close relative of Modi; and Anuj Jain, the chief technology officer. Sumit Chowdhary is the chief information officer. He has joined RIL after a successful stint at IBM, where he served as VP and partner. Chowdhary has also worked at Reliance Communications. RIL has also roped in Arvind Rao as the head of innovation and platform. Rao was the MD and CEO of On-Mobile Global.
$10-billion telecom foray
Telecom foray will cost Ambani $10 billion, of which RIL has spent about $4 billion in getting licences and on infrastructure development. The company would spend $6 billion in the next three years to launch and stabilize operations. Riding on the success of its deal with BP, the company is eyeing to get the largest foreign direct investment in the country by selling a little over 25% stake in Reliance Jio for $3.5 billion to US-based AT&T, valuing the company at $14 billion — 60% more than the combined market cap of Idea Cellular ($6.14 billion) and Reliance Communications ($2.4 billion) or 63% of Bharti Airtel's market cap of $22 billion, even before its launch.
Aims to be No. 1
It aims to become India's largest telecommunications player within three years of the launch and to break even by the end of third year. Analysts believe Ambani will definitely change the pecking order in the world's third biggest telecom market as most players are reeling under huge debts amid falling margins. Sunil Mittal got the better of the Ambanis when the latter disrupted the Indian telecom market a decade ago. The jury is out on which way the wind would blow the second time.
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