Stiff Competition: Reliance Industries To Spend Rs 30,000 Crores To Boost Reliance Jio Network

Reliance Jio
"Today, the Telecom Regulatory Authority of India (TRAI) has advised Reliance Jio to withdraw the 3 months` complimentary benefits of Jio Summer Surprise," Reliance Jio said in a statement yesterday.
Mumbai, Jan 16: Reliance Industries will spend another Rs 30,000 crore to enhance the network coverage and capacity of Reliance Jio Infocomm, taking the total investment in the telecoms venture to more than Rs 2 lakh crore.

The company will raise the funds through a rights issue of optionally convertible preference shares, it said in a notice sent to the National Stock Exchange. It had raised Rs 30,000 crore last year as well via a rights issue in two tranches, in January and September.

The board in its meeting on Friday decided to make the rights issue to raise up to Rs 30,000 crore, it said in the notice. The telecom unit will offer 600 crore, 9% non-cumulative optionally convertible preference shares at Rs 50 each, including a premium of Rs 40.

Reliance has already invested Rs 1.71 lakh crore in the unit that launched commercial services on September 5 and is quickly expanding subscriber base, fuelled by initial free data and voice offers. Jio’s launch has disrupted the market, as rivals like Bharti Airtel, Vodafone India and Idea Cellular were also forced to cut prices, even as the industry returned to a phase of margin denting price war.

The company has built a nextgeneration data network with 4G technology and created an ecosystem comprising network, devices, applications and content. Within four months of the launch, it has signed up 72.4 million subscribers for the high-speed data and voice services.

According to the company, the subscriber addition rate was the fastest achieved by any company in the world, including the likes of Facebook, WhatsApp and Skype.

We earlier reported that Reliance Jio may well disrupt India’s smartphone market as well with low-cost 4G feature phones, the way it did in the telecom services segment with its game changing tariff plans.

A large number of customers could take to the handsets, expected to be launched by the Mukesh Ambani-led company at Rs 999 and Rs 1,500 during this quarter, analysts said.

According to them, this may spell a setback of sorts to the smartphone market. The company notice on late Friday said the amount paid on each optionally convertible preference shares shall be redeemed at Rs 50 or converted to five equity shares at `10 each at any time at the option of the company, but not later than 10 years from the date of allotment of the OCPS, it said.

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