RCoVL to raise $500 mn abroad

Reliance Communication Ventures Ltd (RCoVL) has decided to raise funds not exceeding $500 million (approximately Rs 2,200 crore) through foreign currency convertible bonds.

The RCoVL board today approved the raising of long-term funds from international markets at a premium to the ruling market price of the equity shares of the company. The RCoVL stock today closed flat at Rs 320.45 on the Bombay Stock Exchange.

RCoVL, the flagship company of the Anil Ambani group's telecom business, will invest Rs 5,000 crore in each of the next three years.

Group Chairman Anil Ambani had said the company would require Rs 2,500 crore a year for its wireless operations, Rs 1,500 crore for the broadband business, Rs 1,000 crore for global operations and Rs 500 crore for common servicing assets, for the next three years. Industry watchers said the company would also come out with an initial public offering shortly.

However, the exact size and timing of the offer was not yet decided.

RCoVL's wireless activities include its GSM business in the north-east and fixed wireless and CDMA services across the country.

The telecom business has a total subscriber base of 18.3 million.

The Rs 15,000 crore capex will be used for network expansion of its CDMA business to over 4,500 towns from the present 2,000 towns (which will be completed in months), expansion of its GSM operations, and roping in both enterprise and retail customers for its broadband business, among other things.

RCoVL is in the process of emerging as the flagship company having control of the assets and franchises of all operating firms in the group's telecom business.

For this, it has been proposed that RCoVL would merge Reliance Infocomm (RIC) with itself. It will have wholly owned subsidiaries "" Reliance Telecom (RTL), Reliance Communications Infrastructure (RCIL) and Flag Telecom.

In the process, the promoters stake in RCoVL will increase to 63 per cent from about 40 per cent now.

Foreign investors will hold 18 per cent, retail Indian investors 14 per cent and domestic institutions and mutual funds 5 per cent.

Following the reorganisation, RCoVL's paid-up equity share capital will increase to 2.045 billion shares of Rs 5 each at Rs 1,022 crore. The scheme of reorganisation would be effected from April 1.