Boby Kurian

Bangalore, June 6

AS the broad contours of the Ambani settlement story emerge, the information from the top rungs of the Reliance group suggests that Reliance Infocomm, the telecom arm that has been critical to the family split, is poised to match the flagship company, Reliance Industries Ltd, in turnover as well as net profits over the next four years.

This is seen as crucial to the settlement process, and also seems to answer the rather steep Rs 29,000 crore valuation of the 50 per cent stake controlled by Mr Mukesh Ambani in the Infocomm business.

According to the asset division plan, Mr Anil Ambani would get Infocomm, Reliance Energy and Reliance Capital besides a cash component of at least $1 billion. Mr Mukesh Ambani would keep Reliance Industries along with IPCL.

Sources said Infocomm can post revenue of over Rs 86,000 crore by the year 2009. The company earned a maiden profit of Rs 51 crore on total revenue of Rs 5,387 crore in 2004-05. This could put Mr Anil Ambani, Vice-Chairman of Reliance Industries, on course to vie with his elder brother and Chairman, Mr Mukesh Ambani, for a more prominent legacy for their father, the late Dhirubhai Ambani.

"Infocomm business is at the tipping point. The net profit is poised to grow several hundred times a year due to higher revenue streams coming from the same assets and due to long tenure of tax benefits available to telecom service providers," sources at Reliance corporate office said.

The company has already stated that it is targeting subscriber base of 100 million by 2008, up from the existing 10 million, which would make it one among the top three telecom service providers in the world along with China Telecom and China Unicom.

Interestingly, Reliance Infocomm was touted as the elder brother's dream project, and his move to pump in Rs 24,000 crore as initial investment for the roll out had fuelled the family fire when the squabbling still raged only in the private domain.

"The real strength of Infocomm lies not just in making available mobile communications to the masses but its untapped ability to provide a bouquet of all imaginable telecom services, IT-enabled information services and entertainment services to institutions as well as home segment.

"The company has already laid integrated infrastructure as well as taken multi-pronged initiatives to develop content for delivery on mobile, landline, broadband Internet and digital television. It is fully geared to reap the benefits of convergence of technologies and services on Information Communication & Entertainment (ICE) platform," the company sources said.

"We believe Infocomm is likely to match RIL both in sales and net profit by the year 2008-09. In fact, Infocomm may overshadow RIL five to seven years hence in much the same way as refining has overshadowed petrochemicals within RIL," sources added.

RIL posted a turnover of Rs 73,164 crore in 2004-05. The company's turnover as well as net profit has undergone dramatic change in the last five years since the commissioning of Jamnagar refinery whose level of integration of different units is similar to Infocomm's level of integration of all elements of value chain of ICE.

(This article was published in the Business Line print edition dated June 7, 2005)
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