RCom’s capex may fall ’09 onwards

Font Size

Print

Feedback

Email

Discuss

Related Articles

Google India ad revenues not impacted: MDGoogle India ad revenues not impacted: MDCrisis puts brakes on India's outbound M&AManpower losing biz, trimming workforce in India

Anil Ambani’s flagship telecom company Reliance Communications’ (RCom) capex is expected to decline significantly 2009-10 onwards, as the company’s spending has reached its peak. This assumes significance in the backdrop of RCom’s investment programme worth Rs 50,000 crore.

Speaking at the company’s fourth AGM, Anil Ambani, chairman, RCom said, “We are at the peak of our capex cycle. Starting next year, our capex intensity is likely to decline significantly. This is a transformational phase for our company with many of our large-scale initiatives currently at a project implementation stage.” Incidentally, RCom shares were up 3.31% on the BSE on Tuesday, to close at Rs 337.10.

“As these projects reach completion, we will reap the rewards for many years to come in the form of strong cashflows, substantially higher stakeholder value and a far superior experience for our consumers,” added Ambani.

For the fiscals 2007-08 and 2008-09, the company had earmarked an investment of Rs 50,000 crore ($10.5 billion), of which Rs 20,000 crore was spent during the previous fiscal.

RCom, which recently bagged licence for the GSM spectrum under the dual technology policy of the government, is targetting 100 million subscribers over a couple of years. India’s telecom user base stands at 344 million, while the mobile-subscriber base stands at 305 million.

“Today, we have close to 60 million subscribers. In the next two years, we will have over 100 million subscribers, and rank among the top 5 companies globally in terms of subscribers in a single country,” noted Ambani.

Meanwhile, the company has contracted group firm Reliance Infrastructure to develop a Special Economic Zone (SEZ) at Dhirubhai Ambani Knowledge City (DAKC) in Navi Mumbai. Ambani said that Reliance Infrastructure is developing part of the 132-acre campus at DAKC, on the outskirts of Mumbai, as an SEZ focussed on IT and IT-enabled services with an estimated cost of Rs 1,000 crore.

“All approvals for this project have been received and Reliance Infrastructure has been contracted to implement it over the next few years,” he said.

Ambani also spoke about the turnaround in RCom’s fortunes at the AGM.

“Three years ago, we inherited a quarterly loss of Rs 250 crore and accumulated bad debts of Rs 5,000 crore. We undertook extensive financial restructuring and have improved our profits every quarter,” he said.