The telecom arm of Reliance Industries, Reliance Jio Infocomm is gearing up for its upcoming 4G services rollout across the nation. Amidst the preparations, the company has announced its plans of obtaining an additional amount of Rs. 1,000 crores in debt. It will use the money in the expansion of its business.
Last week, in a regulatory statement, Reliance Jio said, "Infotel Broadband Services Limited has informed the Bombay Stock Exchange (BSE) that pursuant to the approval of the Board of Directors and shareholders, the company proposes to issue secured redeemable nonconvertible debentures aggregating up to Rs. 1,000 crore, on private placements basis."
The Mukesh Ambani-led company took possession of Infotel Broadband post the spectrum sale in 2010. Infotel Broadband is the only company to have a block of 20 MHz of airwaves in the 2300 MHz 4G band.
Investments and debts of Reliance Jio
Reliance Industries had earlier planned to acquire Rs. 3,500 crore debts for its telecom venture. With the latest announcement, the aggregate loan obtained by the company this Financial Year has become Rs. 9,000 crore. This year in May, the company borrowed $750 million, which is around Rs. 4,500 crores. It raised the money from a consortium supported by Korea Trade Insurance Corporation. The loan will be repaid in a period extending up to 12 years.
Reliance Industries has made an investment of around Rs. 1 lakh crore for its telecom venture. Reliance Jio has announced that it will roll out its 4G services from December, this year. The monthly tariff for the services will be between Rs. 300 and Rs. 500. The company will also sell 4G-enabled mobile phones at affordable rates of Rs. 4,000.
Developments of Reliance Jio
The telecom company has a pan-India permit to launch its services. It is currently testing its networks and will soon initiate a beta program. Reliance Jio has already marked its presence in all the states of the country, covering around 18, 000 towns and cities and 1 lakh villages. It has set up an optical fiber network extending up to 2.5 lakh route kilometers of fiber optics. The company plans to double its fiber network by 2018 and connect more than 1 million houses by April, next year. Experts have predicted that Reliance Jio's launch will adversely affect the leading telecom operators of the country.
Plans of Reliance Jio
Reliance Jio is negotiating with 28 mobile phone manufacturers for selling self-branded compatible devices. This includes leading companies like Samsung and Apple. The company is also talking with five chipmakers including Intel and Qualcomm for seamless 4G connectivity on the devices. Besides, it is also engaging partners that will make Wi-Fi devices to enable 4G connections on 2G and 3G devices.
To expedite the sales of 4G devices and services, the company will set up 1,000 Jio Centers across the country. It will also increase the number of Reliance Digital outlets. At present, there are 1,298 stores of Reliance Digital. The company added around 100 stores in April-June 2015 quarter. Apart from these, the 4G devices will also be sold at retail stores and online shopping portals.
Summary
Reliance Jio will obtain a loan of Rs. 1000 crore more, before the 4G launch, for expansion of its business.