Reliance Industries Ltd. (RIL) on Friday entered into an agreement to acquire a substantial stake in Infotel Broadband Services (P) Ltd investing about Rs. 4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel Broadband to RIL.
Post-investment, RIL will own 95 per cent of the equity and Infotel Broadband will become a subsidiary of RIL.
Infotel Broadband Services has emerged as the successful bidder in all the 22 circles of the auction for broadband wireless access (BWA) spectrum conducted recently by the Department of Telecommunications (DoT).
However, RIL stated that it “will comply with the non-compete and trademark agreements entered into at the time of corporate de-merger and subsequent modifications made last month.”
The Mukesh Ambani-led RIL and Reliance ADA Group companies owned by his younger brother Anil Ambani have agreed on May 23, to cancel all existing non-compete arrangements which the two groups entered in January 2006 at the time of corporate de-merger.
However, RIL had agreed not to enter the gas-based power generation business for the period up to March 31, 2022, with an exception made in respect of RIL's captive gas-based power plants.
“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,” said Mukesh Ambani, Chairman and Managing Director of Reliance Industries.
RIL 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 with existing communication infrastructure in the country. “RIL's initiative will usher in a wireless broadband revolution in both urban and rural areas across the country by providing end-to-end data solutions for business enterprises, social organisations, educational and healthcare institutions and Indian consumers,” the release said.
Our Delhi Correspondent writes:
The company said that RIL would infuse Rs. 4,800 crore in Infotel as fresh equity capital to gain 95 per cent stake, the value for which it had put at Rs. 5,000 crore.
Infotel had emerged as the sole winner of broadband spectrum for the entire country for Rs. 12,872 crore.
In the BWA space, no other player could bag pan-India spectrum.
Bharti Airtel and U.S.-based Qualcom won four circles each, while Aircel bagged spectrum in eight circles.