Reliance Jio will launch a rights issue of shares to raise Rs 20,000 crore.
Reliance Industries’ announcement of last month about raising Rs 25,000 crore via non convertible debentures for further investments into its disruptive telecom foray Jio hasn’t yet come to fruition, but Mukesh Ambani is not taking a pause in ramp up of the venture which has taken the Indian telecom industry by storm. The company said on Thursday that Reliance Jio will launch a rights issue of shares to raise Rs 20,000 crore.
Notably, Reliance Jio has already seen massive investments and commitments worth just shy of Rs 2 lakh crore. Reliance Industries is yet to discuss at its AGM on July 21 its previously proposed fundraising through private placement of non convertible debentures in order to replace its existing high cost debt and rapidly expand its telecom business Reliance Jio, which has already shaken up the industry with dirt cheap voice and data tariff offers.
Earlier in April, Reliance Industries raised to propose its capital expenditure on Reliance Jio by Rs 18,000 crore in the current quarter, adding to the Rs 1.79 lakh crore that it had already put into the venture thus far. Reliance Jio had said that it would add another 100,000 towers to the existing network of 100,000 mobile towers. Reliance Jio is also in the process to launch optical fibre based home broadband services under the name of ‘Jio Fibre’, and is currently testing the network along with trial offers in major cities.
Reliance Jio has grown at a breakneck speed since the official rollout of services on 5 September 2016. It crossed 50 million subscribers in just 83 days, and 100 million in 170 days, adding at an average rate of six lakh subscribers per day. The relentless competition from Reliance Jio has hurt the incumbent telecom operators, forcing them to cut tariffs to retain users, and has led to major consolidation in the crowded Indian telecom market. The telecom operators are facing tremendous pressure on revenue and profitability, even as the industry’s debt has soared to nearly Rs 8 lakh crore.
Major operators Vodafone India and Idea Cellular have agreed to merge to gain scale to compete. On the other hand, Bharti Airtel – India’s largest telecom services operator for now – has acquired smaller rival Telenor India to further augment its customer base and network.
Earlier this year, a TV news report said that Tata Teleservices is in talks with Reliance Communications to merge its operations with the Anil Ambani group-controlled entity. Reliance Communications, on its part, is all set to finalise deals to merge Aircel Ltd into its own wireless telephony business. It is also in the process of finalising a merger of Systema Shyam Teleservices, the owner of MTS services, with itself.