New Delhi: Shares in Reliance Industries rose more than 2% on Monday after the petrochemicals-to-refining conglomerate agreed to buy a telecoms firm, giving it a foothold in the fast-growing market.
Billionaire Mukesh Ambani, who controls Reliance Industries, has been quick off the blocks after a long-running feud with his younger brother Anil ended last month and a pact to not compete with each other was revoked.
On Friday, Reliance Industries said it would take a 95% stake in Infotel Broadband, which was the only company to win a nationwide licence in India’s broadband wireless spectrum auction.
A spokesman for the India’s largest-listed firm said on Monday the company would invest about $5 billion in the telecom venture over the next two years, including the broadband spectrum fee to be paid by Infotel.
At 10:26am, shares in Reliance Industries with a market value of $73 billion, were up 1.4% at Rs1,061.20 in a Mumbai market that had gained 0.9 percent. Reliance shares had risen as much as 2.2% in early deals.
More than 1 million Reliance shares had changed hands on the National Stock Exchange, compared with full-day average volume of 4.8 million for the past 30 days.
Mukesh Ambani, the world’s fourth-richest man, had been widely expected to return to the telecom market after Reliance Communications that he had built went to Anil after the brothers split up the family empire in 2005.
Reliance Industries expects broadband connections in India to grow rapidly in the next three years, while mobile broadband is likely to be the primary means of high-speed access, the company said in a presentation on its website.
China, the world’s biggest telecoms market, had 130 million broadband subscribers, Reliance said in the presentation, adding India can catch up in three to four years.
India’s broadband penetration -- connections per 100 people -- is extremely low at 0.74, whereas more than half of the population have a telephone, according to the Indian telecoms regulator.
Reliance has said it would have an “asset light approach” and would collaborate with technology firms and network infrastructure providers as it rolls out a broadband network all across a vast geography.