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| RCom capex to decline from this year: Ambani |
| BS Reporter / Mumbai Sep 23, 2009, 00:15 IST |
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AGM approves Reliance Infratel IPO, filing soon.
Reliance Communication’s capital expenditure will decline from this year, mainly due to completion of the GSM network rollout, even as the company is planning to offload a 10 per cent stake in its telecom subsidiary, Reliance Infratel.
“We expect our capex to decline significantly starting this year and continue on a downward trend in the future, particularly in relation to the scale of our expanding operations,” RCom Chairman Anil Ambani told shareholders at its annual general meeting here.
The company’s capital expenditure was over Rs 40,000 crore during the past two years, a substantial portion of which was used for GSM rollout.
 “Today, with the peak of our capex cycle behind us, we are expecting to reap the substantial benefits of these investments in the form of strong cash flows and superior customer experience,” he added.
According to Ambani, the company’s balance sheet continues to be strong, with a conservative net debt-equity ratio of 0.53.
RCom is close to filing a Red Herring Prospectus with the Securities and Exchange Board of India “soon” for the proposed Initial Public Offering (IPO) of Reliance Infratel, its tower subsidiary. The IPO was approved at today’s meeting.
The issue would constitute 10 per cent of the post-issue paid-up equity capital of Reliance Infratel, while RCom shareholders would hold 85 per cent stake in Reliance Infratel post the IPO, he added.
“Our decision to demerge was guided by the need to keep ourselves asset-light, improve our return on equity and create value for our shareholders,” he added.
In July 2007, RCom divested 5 per cent of its Reliance Infratel stake for about Rs 1,400 crore ($337.5 million). This deal attributed an equity value of about Rs 27,000 crore ($6.75 billion) to Reliance Infratel.
At present, Reliance Infratel has over 48,000 towers and multiple tenants, including Etisalat DB, S Tel, Aircel, Tata Teleservices and MTS.
RCom is aiming to acquire a total of around 100 million subscribers by the end of this financial year, making it the second operator to cross the mark in a single country. GSM major Bharti Airtel had crossed the mark earlier this year.
Meanwhile, RCom said on Tuesday it had appointed S P Talwar as Director and BSR & Co Chartered Accountants, an Indian associate of KPMG, as auditor of the company. The shareholders have also approved the appointment ofChaturvedi & Shah Chartered Accountants as auditor, Reliance Comm said in a filing to the Bombay Stock Exchange.
Anil forgoes salary for 2008-09
Anil Ambani has not taken his salary and commission totalling around Rs 30 crore from Reliance Communications for 2008-09. Answering a shareholder’s question, he said this was due to recession.
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