RIL buys 95% stake in Infotel Broadband

Mukesh Ambani owned Reliance Industries has bought 95% stake in Infotel Broadband for Rs 4,800 crore.

Infotel Broadband will now be a subsidary of Reliance Industries. Shares of RIL have been buzzing of late on rumours of foray in the telecom sector. Infotel Broadband has won pan India Broadband Wireless Access spectrum license for 22 circles for around Rs 12,848 crore.
Announcement of the deal came within hours of Infotel emerging as the sole winner of broadband spectrum for the entire country.

This marks Mukesh Ambani group's entry into telecom sector in less than a month of he and his younger brother Anil reaching a truce by ending all the no-compete agreements to enable each other an opportunity to enter and invest in areas hitherto barred under the family settlement reached in 2005 for division of Reliance empire.

RIL will invest Rs 4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel Broadband, the company said in a statement.

The share prices of both HFCL (promoted by Mahendra Nahata) and HFCL Infotel (promoted by son Anant Nahata) today rose by the maximum limit and closed at Rs 11.39 and Rs 10.14 a share respectively. RIL's shares also surged over three per cent to close at Rs 1,046.25 a share.

Commenting on the initiative, RIL Chairman and Managing Director 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."

RIL said that BWA services can provide an opportunity to be in the forefront among the countries providing world-class 4G networks and services.

"A single 20 MHz spectrum when used with Long Term Evolution (generally known for 4G technology) has the potential of providing greater capacity when compared to existing communication infrastructure in the country," the company said.

In the BWA space, no other player could bag pan-India spectrum. Bharti Airtel and US-based Qualcom won four circles each, while Aircel bagged spectrum in eight circles.

There are reports that RIL was also talking to a new telecom licencee, Videocon Mobile, for a possible stake in the company. Videocon's share also went up by 0.40 per cent to close at Rs 22.20 a share.