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Reliance takes Rs 265 cr hit via Infocomm loss

BS Corporate Bureau in Mumbai | April 30, 2004 10:53 IST

Reliance Industries, which holds 45 per cent stake in Reliance Infocomm, has taken a hit of Rs 265 crore (Rs 2.65 billion) due to the loss posted by the telecom major.

Anil D Ambani, vice-chairman and managing director, said RIL, which also holds 52 per cent stake in Reliance Energy, has decided against making any fresh investments in the telecom and power companies.

RIL has invested over Rs 3,000 crore (Rs 30 billion) in Reliance Energy (formerly BSES). "Our investments in Reliance Infocomm are behind us. It will fund its plans through its own resources and through its ability to raise debt. In the case of Reliance Energy, the company has a debt-equity ratio of 0.1:1.This company too can fund its plans on its own," said Ambani.

The move against investing further in Reliance Infocomm comes even as the company has emerged as the largest telecom company with over seven million customers and a market share of around 22 per cent. The company plans to enter 5,000 towns by March 2005.

The company has garnered its substantial market share riding on the back of entry pricing and an aggressive advertising campaign.

Average revenue per user at Infocomm stood at Rs 523 per month, and the company will be focusing on higher ARPU. The company said it had 20 per cent market share in international long distance incoming calls.

The company during the course of this year will introduce voice and data, interactive television and video on demand. RIL's total investment of Rs 12,000 crore (Rs 120 billion) in Reliance Infocomm has a preference share portion of about Rs 8,000 crore (Rs 80 billion), which carries a conversion option.

On Reliance Infocomm's IPO, Ambani said: "There is no tearing hurry. RIL would want to unlock value (in due course). The priority is to touch a subscriber base of 40 million -- it will take some time."

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Sub: Replace inexperienced by suitable professionalists for profits!

Such an adverse state of affairs was anticipated due to poor management mostly by freshers as the professionalism is absent. A high degree of politics ...


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