RCom slots Rs 30k crore for expansion

Reliance Communications (RCom), the country's second biggest mobile operator promoted by Anil Ambani, has earmarked Rs 30,000 crore for capital expansion this financial year with an aim to take its subscription to 100 million by 2010 from the current 60 million.

The company, which added 18 million subscribers last financial year, has already spent Rs 20,000 crore to expand its network in the last one year, said Anil Ambani at the company's fourth annual general meeting today. Ambani expects R-Com’s capex to decline by next year.

"Over the previous financial year and the current one, we have earmarked an investment spend of more than Rs 50,000 crore," he added.

Three years ago (before the Reliance demerger in 2005), the telecom arm with a fragmented corporate structure and barely 10 million subscribers was making a loss of Rs 250 crore every quarter. It has now transformed into a profitable company, clocking Rs 1,500 crore in net, claimed Ambani.

"Three years ago, we inherited a highly fragmented corporate structure with minority holdings across multiple telecom assets… Our EBITDA (earnings before interest, taxes, depreciation and amortization) margins on a significantly smaller revenue base were just 7 per cent. Today, we are already the most profitable telecom company in the country with margins of over 43 per cent," said Ambani.

His estranged elder brother, Mukesh, launched and controlled the telecom business before the demerger.

RCom, which has recently bagged GSM spectrum under the dual technology policy of the government, plans to roll out the service from late this year.

"We have already tested signals for our GSM foray in Delhi. Yesterday, we initiated the same process in Mumbai," said Ambani, adding that the company would participate in the auctions of 3G and WiMax spectrum allocation.