Reliance Industries (RIL) is likely to invest Rs 60,000 crore into its telecom unit this fiscal year as the company seeks to speed up the roll out of broadband services and expand its wireless network, two people aware of the matter said.
In addition to this, unit Reliance Jio Infocomm Ltd may also borrow as much as Rs1 trillion, the people said, requesting anonymity.
“This is being done as Jio wants to fast-track its plan to scale up its capacity and coverage which would require further infusion of funds,” said one of the two people.
Spokespeople for RIL and Jio did not immediately respond to queries.
The firm will continue to invest in laying fibre even as it has already built the largest optical fibre network in the country, Anshuman Thakur, head of strategy and planning at Jio, said in an interview on 27 April, after Reliance Industries announced its earnings.
“In terms of total investment, we don’t normally say such figures, but it is the largest network in the country, on both intra city as well as inter-city (fibre). We have a substantial advantage over all operators. But, we will keep on building fibre. We are gradually rolling out our FTTH (broadband services) and other services, during the course of which we will be laying much more fibre,” he said.
“On the tower (side), we have identified this phase of network rollout. Beyond that, it’s the capacity side (where the investments)… will be required. We are well equipped to put towers on our own if others don’t want to give us. But, if they give us, you know every tower we will have to decide whether we should build on our own or lease it from others,” Thakur said.
The fresh investments will also allow Reliance Jio to maintain pricing pressure on rivals, who are bleeding due to a tariff war sparked by the Mukesh Ambani-led firm. The firm has also said it remains focused on providing higher value to consumers and will prioritize customer engagement over short-term revenue recovery, which means it will retaliate if rival operators try to sweeten their offers.
“RIL may have to keep pumping in money through a combination of equity or raising of debt. Though, the investments may not happen at the same intensity as it happened in the initial years of Jio’s rollout, the management indicated that Jio will focus more on fibre-to-the-home, enterprise offering, Internet of things services and other digital services. These segments would need investments going forward,” a Mumbai-based analyst tracking RIL said on condition of anonymity.
Reliance Jio will also continue to invest aggressively to acquire content as it sees it as a key differentiator. The company is in final stage of commercial launch of home broadband services, though the rollout is expected to be gradual.
For the March quarter, Jio reported a 1% growth in profit from the preceding three months. It also saw its average revenue per user fall to Rs137 in the March quarter from Rs154 in the preceding December quarter.
“Clearly, Q4FY18 numbers demonstrate that RJio is no longer insulated from competition and any rise in the same would hurt RJio equally or probably more than the incumbents,” ICICI Securities said in a 30 April report. – Live Mint