India's Reliance Communications plans to spend 160 billion rupees ($3.96 billion) on network expansion in 2007/08, and will spin off its business process outsourcing unit, its chairman said on July 17.
India is the world's fastest growing mobile services market, with more than 6 million subscribers added each month, lured by tariffs as low as one US cent a minute and the extension of networks to rural areas.
"If version 1.0 of the Indian telecom story was all about affordability, version 2.0 will be about reach," Anil Ambani, who took control of the firm in 2005 after a bitter split with elder brother Mukesh, told shareholders at its annual meeting.
"It is expected that the usage of telephony will continue to grow at the present rate of 6 to 7 million additions per month over the next several years to reach the 500 million connections mark by year 2010."
Reliance Communications, India's second-largest mobile services firm after Bharti Airtel, said in April it was planning to spend over 100 billion rupees in the current fiscal year on expanding its infrastructure.
The firm's shares were down 1.3 percent at 566.50 rupees at 0848 GMT in a Mumbai market that was up 0.43 percent. The stock had hit a lifetime high of 579.70 rupees earlier in the session. It has gained nearly 35 percent so far this fiscal year.
UNLOCKING VALUE:
Reliance BPO, which provides back office services to firms in the telecoms, banking, financial services and insurance sectors, will be separated from the parent company in a move to unlock shareholder value, Ambani said.
"We intend to leverage these skills and capabilities to grow an independent and profitable business," he added but did not give a timeframe. The BPO unit has more than 7,800 employees across several sites in India.
Reliance Communications said in April that it would take a decision in the next six months on "unlocking value" in its Reliance Telecom Infrastructure unit, and a potential listing of Flag Telecom.
Ambani said the company was considering a private placement of equity followed by a public issue of shares for the infrastructure unit, which builds and manages the firm's towers.
For Flag, which operates its under-sea cable network, a private placement and/or an overseas share issue was being considered, he said. Reliance Communications, which said on July 16 it had agreed to buy US-based managed ethernet services provider Yipes for $300 million, was looking for more international buys.
"We are currently evaluating a number of inorganic opportunities in select international markets to further expand our footprint," Ambani said.