Mukesh dials telecom again

Reliance Industries Ltd.,India’s largest private firm is set to buy 95% in Nahata-owned Infotel for Rs 4,800 crore; to get broadest BWA footprint.RIL Chairman and Managing Director Mukesh Ambani was forced to hand over the telecom business to his brother Anil when they broke up the Reliance empire five years ago. The acquisition of Infotel became possible after the two brothers ended a non-compete accord a month ago. Minutes after the acquisition announcement, Anil Ambani, who controls the country's second-largest telecom company, Reliance Communications, welcomed RIL's entry into telecom.
Infotel is a two-year-old entity, with the stated objective to roll out WiMax across all circles in India. RIL said it would buy 95 per cent of Infotel, which hours earlier became the only company to buy nationwide licences to offer wireless broadband internet services.
For the time being, RIL will go for only the lucrative corporate bandwidth market, or the business of selling telecom and internet services to companies rather than individuals.
Unlisted Infotel is the only firm to win broadband spectrum in all 22 zones in India in an auction that ended today. The firm is paying Rs 12,848 crore for the spectrum and sources familiar with the developments said RIL would pay this fee. Nahata said the company was in talks with RIL before the BWA auction.
RIL will invest by subscribing to fresh equity capital at par to be issued by Infotel. While third-generation (3G) spectrum allows high-speed internet access and data transfer on mobile phones, broadband spectrum would enable firms to provide high-speed wireless data links with better coverage than fixed-line broadband. RIL said it saw the broadband opportunity as a new frontier of the knowledge economy, in which it could 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, the company said.
RIL said its initiative will usher in a wireless broadband revolution across the country and it planned to create state-of-the-art technology using an asset light strategy. RIL will forge several strategic relations with a host of leading global technology players, service providers, infrastructure providers, application developers, device manufacturers and others to leapfrog India to the 4G revolution. Mukesh Ambani termed the deal as the next wave of value creation opportunity in the wireless broadband space.
RIL has re-entered telecom at a time when the sector is going through a lot of pain in terms of reduced voice rates. Broadband penetration in India is as low as 1 per cent. While some analysts see this as an opportunity, some say monetisation from this service will be an uphill task.