Mukesh Ambani in Prime Position to lead a Telecom Revolution in India

For Reliance Industries Limited (RIL), Oil & Gas represents the biggest source of revenue with new ventures such as retail, polymers, and petrochemicals also contributing a big chunk. However, the Mukesh Ambani owned behemoth seems to be focusing a large part of their resources toward the telecom sector.

If you remember, it was Mukesh Ambani who was primarily responsible for the launch of Reliance Communication at the start of the decade. Now running his own ship, the older Ambani scion looks set to make a huge mark on the telecom sector with his forays. Ambani’s Reliance JioInfocomm was the first to acquire pan-India 4G licenses and they also looked toward getting right for voice calls.

While industry analysts have for long been claiming that RJIL was in a prime position in the industry due to its pan-Indian 4G license and also the company entering the voice segment, the intent from the company’s side has never been stronger than what was seen in the recent spectrum auction. If India’s richest man does indeed bet big, he will emerge from this week’s airwave auction armed with spectrum that could make his Reliance Industries Ltd a formidable rival to market leaders Bharti Airtel Ltd and Vodafone Group PLC. If not, he can still walk away with airwaves that would allow his Reliance Jio to compete in the cut-throat market for basic phone services. The company plans to offer 4G services but has yet to launch any.

While this may be music to the ears of consumers who for long have complained about growing tariffs, major players such as Vodafone Plc and Bharti Airtel are worried. Shares in India’s biggest cellular carriers lost between 4-7 per cent in a single day after Reliance threw its hat in the ring for the spectrum allocation Auction in the first of February 2014 and do not look poised to recover. Just looking at the numbers, it’s clear that RJIL is going for the kill. The end of Day 1, the government received $7 billion or nearly Rs. 40,000 Croreworth of total bids and looked set to top its minimum target of raising $1.8 billion or Rs. 11,300 crore initially.

Analysts say that competition in the telecoms sector will heat up with the entry of RJIL and crucially for the consumer, lead to a decline in tariffs. Reliance has invested roughly $5 billion or Rs. 31,000 crore in the business so far without seeing a return, to the annoyance of some of its investors.Reliance has disclosed little about its plans for 4G, but with $14 billion (Rs. 87,000 crore) in cash and telecoms in his blood, no one in the industry is taking Ambani lightly.



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