Indian conglomerate Reliance Industries Limited (RIL) is to acquire 95 per cent of Infotel Broadband Services, the only bidder in the recently concluded Indian Broadband Wireless Access auction to win 20MHz of pan-Indian spectrum. RIL said it was paying $1.033bn for the stake in Infotel.

Mike Hibberd

June 14, 2010

2 Min Read
Reliance buys Infotel Broadband as Indian BWA auction closes
The purchase of Infotel marks a return to the Indian telecoms market for Mukesh Ambani

Indian conglomerate Reliance Industries Limited (RIL)  is to acquire 95 per cent of Infotel Broadband Services, the only bidder in the recently concluded Indian Broadband Wireless Access auction to win 20MHz of pan-Indian spectrum. RIL said it was paying $1.033bn for the stake in Infotel.

The deal marks a return to the Indian telecoms industry for RIL chairman Mukesh Ambani, the billionaire industrialist whose feud with brother Anil saw the old Reliance, founded by their father, split between the two in 2005. Anil’s business, Reliance ADA Group, is the parent of Reliance Communications, which operates fixed and mobile networks in India.Just three weeks ago the brothers agreed to end their feud by scrapping non-compete agreements, one of which had kept Mukesh out of the telecoms sector.

RIL has indicated its intention to launch an LTE network using the spectrum bought by Infotel for $2.74bn, a sum that RIL will cover as the new owner of the winning bids. The firm also said that it would look to follow an “asset light strategy”, suggesting that it will look to network sharing arrangements and outsourcing in its deployment of LTE. The firm said it would “forge several strategic relations with a host of leading global technology players, service providers, infrastructure providers, application developers, device manufacturers and others to leapfrog India to the 4G revolution.

The statement fuelled speculation that RIL could look to partner with Reliance Communications, which was a big spender in the Indian 3G auctions that closed last month.

US vendor Qualcomm was another winner in the BWA auction, gaining 20MHz of spectrum in each of the Delhi, Mumbai, Kerala and Haryana operating areas. The firm spent $1.045bn on the spectrum, and said that it would look to establish LTE networks in the four regions in partnership with local players before exiting the operations.

Alison Hanckock, a consultant and spectrum auction specialist at Coleago Consulting, told Telecoms.com that Qualcomm’s spectrum purchase was a shrewd move that would give the firm leadership in the TDD-LTE silicon market. The potential returns in Qualcomm’s situation justified the outlay, she said, adding that broadband provision business models looked less convincing given the sums spent by other bidders in the BWA auctions.

Hancock said that Mukesh Ambani’s apparent commitment to LTE raised questions over his thinking. With TDD-LTE “optimistically two years away,” she said, RIL might be better advised to push ahead with a WiMAX rollout which could establish it in the market, and still leave a potential migration path to LTE when the technology was mature enough for deployment.

About the Author(s)

Mike Hibberd

Mike Hibberd was previously editorial director at Telecoms.com, Mobile Communications International magazine and Banking Technology | Follow him @telecomshibberd

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