Reliance Communications – Integrated Telecom Company with Global Ambitions

I just got off the Reliance Communications conference call and would like to share some of the key points from the same. They have announced real good results for FY2008, though with a caveat on Debt and others [See the balance sheet, I hardly know accounts]

Mr. Anil Ambani said,

• They added over 18 mn customers taking the total to over 46 mn
• RCom is now amongst the top 5 Telcos in Asia
• World’s largest network by year end [CDMA + GSM]
• Awarded contracts for equipment and network rollout in the GSM segment.
• Reliance Mobile [GSM vertical] has secured startup spectrum of 4.4 MHz in 1800 MHz band across India.
• GSM operations apart from the existing 6 circles will begin by the end of this year in Phased Manner [Completeness of Coverage in a Circle]
• Has got spectrum in Sri Lanka and Uganada for wireless services.
• Acquistion of eWave World WiMax operator for Global Enterprise services. $500 mn CAPEX planned for this segment
• BigTV – Reliance Communications DTH Platform has commenced trial runs with employees and other channel partners. Only High Definition DTH provider in India.
• Reliance Globalcom to be amongst top 5 Enterprise service providers in the world
• Total CAPEX of $11 bn between previous year and current year

RCom doesn’t hope to kill the CDMA services and will let the market / customers decide on what platform they want to be on. However, pricing and schemes by the company will be an influencing factor. A number of companies have already approached Reliance for MVNO deal, and the company is said to be waiting for MVNO guidelines to be finalized rather then rushing into Tata-Virgin, Franchisee Deal.

On Reliance Infratel [Tower company], Mr. Ambani hinted that with the recent regulatory changes one can accommodate Active Infrastructure as well. Valuation has certainly gone up and the company is weighing on options to include GSM and 3G + WiMax when auctioned under the same. RCom will hold 85% after the listing.

Mr. Ambani made it clear that the company is looking at Higher EBITDA market share rather than customer market share or revenue market share. His underlying tone to Analysts was to look at RCom’s high EBITDA busiensses such as Reliance Globalcom / Yipes Enterprise services. IDC business where it is already the number one in India and will add 1 mn sft this year. He even stressed that DTH will be a High EBITDA business for RCom.

The management carefully avoided to be compared directly to peers in the wireless business. MOU is down again this quarter for RCom while the same is up for Bharti Airtel and Idea Cellular. Mr. Shukla, President Wireless Business did admit about some re-balancing being done. RCom has a different strategy, when incumbent operators begin operations. However the tone that I infer is – don’t give up on EBITDA and design products that will preserve the same.

I think I agree, it is always better to look at bottomline than customer market share / MOU etc. For instance, RCom has schemes in which you can talk for unlimited minutes on Reliance network. I have interest in RCom stock by various means.