NEW DELHI: In a move that has made waves in the telecom sector, $44.6-billion Reliance Industries Ltd (RIL) on Friday re-entered the telecom space after signing an agreement to buy a 95% stake in Infotel Broadband Services for a value of Rs 4,800 crore.
Infotel is the only bidder to win 20 MHz of pan-India spectrum at a cost of Rs 12,847.77 crore in the Broadband Wireless Access (BWA) auctions that concluded on Friday. Infotel belongs to Anant Nahatta, son of HFCL owner Mahendra Nahatta.
This brings fresh, tough and potentially unsettling competition for the big boys of telecom with expectations that RIL’s chairman and managing director Mukesh Ambani has his sights firmly on the voice market, which still accounts for over 92% of telecom revenues.
The government does not prohibit the use of BWA spectrum for voice, although the technology is still a couple of years away from supporting voice on this platform.
However, this is hardly a barrier for Mukesh Ambani, who in the past, in 2001, successfully converted his fixed line licence in Reliance Communications (RCOM) to limited mobility, which was subsequently converted to full mobility in 2003. However, he had to part with the telecom venture after the Reliance empire was carved up between him and his younger brother Anil Ambani in June 2005.
Now, just days after a patch-up between the brothers and subsequent dissolving of a longstanding non-compete agreement that restricted Mukesh from entering telecom, the elder Ambani brother has played a dramatic card to re-enter this space.
Interestingly, both brothers are backing different technologies. A statement by RCOM on Friday afternoon said it had exit the auction 5 days ago as the ‘‘auction prices significantly exceeded its business case estimates. RCOM would focus on broadband wireless through 3G-ready pan India CDMA and maximum 13 circle 3G coverage as we prefer LTE standard offering a single evolution path for both, CDMA & GSM networks’’.
However, RIL said it sees the broadband opportunity as a new frontier of knowledge economy in which it can take a leadership position and provide India with an opportunity to be in the forefront among the countries providing world-class 4G network and services.
‘‘A single 20 MHz TDD spectrum when used with LTE (Long Term Evolution) has the potential of providing greater capacity when compared to existing communication infrastructure in the country,’’ RIL said in a statement.
Interestingly, hours after RIL’s announcement of its acquisition of Infotel, RCOM sent out a second statement modifying its stance to say, ‘‘We welcome the entry of Reliance Industries into the high potential wireless broadband space. As leading telecom infrastructure and content service providers, we look forward to offering our services to RIL and other BWA players, even while we compete for customers in the marketplace through our choice of different technologies.”
Commenting on the initiative, Mukesh Ambani, said, ‘‘We see this as the next wave of value creation opportunity in the wireless broadband space. We believe this will pole-vault India’s economy into the digital world at an accelerated pace while creating next generation tools that will enhance productivity and create world-class consumer experiences.’’
MORE INFO - Telecom: Will RIL, RCom compete or collaborate?-Telecom-News By Industry-News-The Economic Times
Infotel is the only bidder to win 20 MHz of pan-India spectrum at a cost of Rs 12,847.77 crore in the Broadband Wireless Access (BWA) auctions that concluded on Friday. Infotel belongs to Anant Nahatta, son of HFCL owner Mahendra Nahatta.
This brings fresh, tough and potentially unsettling competition for the big boys of telecom with expectations that RIL’s chairman and managing director Mukesh Ambani has his sights firmly on the voice market, which still accounts for over 92% of telecom revenues.
The government does not prohibit the use of BWA spectrum for voice, although the technology is still a couple of years away from supporting voice on this platform.
However, this is hardly a barrier for Mukesh Ambani, who in the past, in 2001, successfully converted his fixed line licence in Reliance Communications (RCOM) to limited mobility, which was subsequently converted to full mobility in 2003. However, he had to part with the telecom venture after the Reliance empire was carved up between him and his younger brother Anil Ambani in June 2005.
Now, just days after a patch-up between the brothers and subsequent dissolving of a longstanding non-compete agreement that restricted Mukesh from entering telecom, the elder Ambani brother has played a dramatic card to re-enter this space.
Interestingly, both brothers are backing different technologies. A statement by RCOM on Friday afternoon said it had exit the auction 5 days ago as the ‘‘auction prices significantly exceeded its business case estimates. RCOM would focus on broadband wireless through 3G-ready pan India CDMA and maximum 13 circle 3G coverage as we prefer LTE standard offering a single evolution path for both, CDMA & GSM networks’’.
However, RIL said it sees the broadband opportunity as a new frontier of knowledge economy in which it can take a leadership position and provide India with an opportunity to be in the forefront among the countries providing world-class 4G network and services.
‘‘A single 20 MHz TDD spectrum when used with LTE (Long Term Evolution) has the potential of providing greater capacity when compared to existing communication infrastructure in the country,’’ RIL said in a statement.
Interestingly, hours after RIL’s announcement of its acquisition of Infotel, RCOM sent out a second statement modifying its stance to say, ‘‘We welcome the entry of Reliance Industries into the high potential wireless broadband space. As leading telecom infrastructure and content service providers, we look forward to offering our services to RIL and other BWA players, even while we compete for customers in the marketplace through our choice of different technologies.”
Commenting on the initiative, Mukesh Ambani, said, ‘‘We see this as the next wave of value creation opportunity in the wireless broadband space. We believe this will pole-vault India’s economy into the digital world at an accelerated pace while creating next generation tools that will enhance productivity and create world-class consumer experiences.’’
MORE INFO - Telecom: Will RIL, RCom compete or collaborate?-Telecom-News By Industry-News-The Economic Times