Reliance Industries pumps in Rs 7,500 crore into 4G arm

Mukesh Ambani's Reliance Industries Ltd (RIL) has poured in a whopping Rs 7,500 crore into its telecom and broadband venture, Reliance Jio Infocomm, sources said.

The investment was through an equity infusion just two weeks before the auction of the 1,800 Mhz band by the government, they said. RIL did not respond to an email seeking confirmation of the investment.

Reliance Jio Infocomm, a subsidiary of RIL, is the first telecom operator with a pan-India unified license. It already has a tie-up with Anil Ambani's Reliance Communications and Sunil Mittal's Bharti Airtel for mutual sharing of telecom towers and optical fibre network.

Last week, Reliance Jio Infocomm won the 1,800 Mhz spectrum for voice services in 14 of the country's 22 circles. The total fund outgo is pegged at little over Rs 11,000 crore.  The new spectrum was acquired at a 31 per cent premium to the reserve price.  

The equity infusion of Rs 7,500 crore was to bridge any gap between financing the spectrum and the future requirements of the subsidiary. In November last year, the flagship RIL put around Rs 4,500 crore by way of preference capital.

There is no need for Reliance Jio to run after banks as many other telecom players did just before the auction announcement. RIL has reserves and surpluses of close to Rs 1.80 lakh crore with annual profits in excess of Rs 20,000 crore.

Reliance Jio needs voice spectrum to support its ambitious 4G data services where it has a nationwide broadband wireless license for the 2,300 Mhz band in all 22 telecom circles. RIL said in a statement Reliance Jio plans to make an upfront payment of 33 per cent and pay the rest in 10 equal instalments after a two-year moratorium.

"With the voice acquisition, Reliance Jio will be the  holder of the largest quantum of liberalised spectrum and with the longest residual spectrum life," Mukesh Ambani, chairman and managing director of RIL, had said after securing the voice spectrum.

All eyes are now on Reliance Jio to launch 4G services. There are plans to launch it in metros by the end of this year.

This is Ambani's second foray into telecom after giving away the telecom business to younger brother Anil Ambani in 2006  after the infamous split soon after the death of patriarch Dhirubhai Ambani. RIL, re-entered the fray in 2010 when it acquired a 95 per cent stake for Rs 5,000 crore in Infotel Broadband from Mahendra Nahata of HFCL.