Mukesh Ambani returns to telecom with 3G, WiMAX devices
With the valuation of telecom companies having fallen over 50% in just a year, RIL can, at a later stage, look to acquire a telecom operator either in the domestic market or globally. An RIL spokesperson declined to comment. After the Reliance group split in 2005, Reliance Infocomm went to younger brother Anil Ambani, who renamed it Reliance Communications and launched GSM services.
The demerger was followed by a non-compete agreement between the Ambani brothers, which effectively prevented RIL from entering telecom sector at a time when it was going through blazing growth. The agreement was scrapped on May 23, and FE was the first to report that the company was likely to enter telecom and thermal power sectors.
Launched in mid-2003 by the erstwhile Reliance Infocomm, Monsoon Hungama has been the most successful scheme in the history of India's mobile telephony, offering a phone connection and handset for merely Rs 500. The CDMA platform on which Monsoon Hungama was launched, was a novel and affordable alternative to the masses. RIL hopes to do the same with 3G and WiMAX services, both of which are yet to roll out.
RIL is sitting on cash reserves of $5 billion and can generate $7-8 billion through treasury operations. The company has the ability to generate surplus cash of $18-20 billion in the next one year.
Reliance Infocomm entered telecom at a time when tariffs were in double digits and rules enabled operators to charge incoming calls. It made a splash with calling party pays (CPP) regime and launched Monsoon Hungama with tariffs as low as 40 paise. CPP was later made mandatory through regulatory changes. Infocomm's entry heralded the industry's drive towards low tariffs, which is under way even now.
Source: Indian Express