Reliance to buy Infotel for $1 bn

Reliance to buy Infotel for $1 bn

Mumbai: Reliance Industries, controlled by billionaire Mukesh Ambani, will buy Infotel Broadband Services for $1 billion, marking the re-entry of India’s largest-listed firm into the booming telecom market.

Unlisted Infotel Broadband Services is the only firm to win broadband spectrum in all 22 zones in India in an auction that ended on Friday. The firm is paying Rs12,848 crore ($2.7 billion) for the spectrum, the government said.

Reliance would pay this fee, a source direct knowledge of the matter told Reuters on Friday.

Reliance will invest about Rs4,800 crore by subscribing to fresh equity capital at par to be issued by Infotel Broadband. Reliance will own 95% of Infotel, which will function as a unit of the company.

Shares in Reliance closed up 3% at Rs1,046.25 in a Mumbai market that rose 0.8%.

Industrialist Mukesh Ambani, the world’s fourth-richest man with an estimated fortune of $29 billion, was freed to enter the telecom sector after ending a pact last month with his long-estranged brother Anil Ambani that prevented them from competing on each other’s turf.

When the brothers split up the family empire in 2005, Anil Ambani gained control of No. 2 Indian telecom firm Reliance Communications, and his brother was widely expected to return to the industry.

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 -- key for Internet penetration in India’s rural hinterlands, which have poor last-mile fibre connectivity.

Reliance has been working hard break into new markets and broaden its various businesses including refining, oil and gas exploration and petrochemicals, as well as expand its presence outside India.

The company, which owns the world’s largest refining complex and operates India’s largest gas find, is in talks to buy a stake in the shale gas assets of US-based Pioneer Natural Resources, two sources familiar with the matter said on Thursday.

In April, Reliance bought a 40% stake in the Marcellus Shale operations of Atlas Energy for $1.7 billion, to form a joint venture at one of the most promising natural gas deposit regions in the United States.