RELIANCE: New Boss, Renewed focus?

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The communication industry is sure to keep a close watch on Reliance Infocomm this financial year. For reasons, both good and bad, the telecom arm of India's biggest corporate group was in news throughout the year. Much to the relief of the shareholders, the dispute resolution between the Ambani brothers on
June 18, 2005 halted the rumor mills that were churning out speculative stories about the future of the Reliance empire.

Now under the leadership of Anil Ambani, the younger of the two brothers, and as part of a new group, Anil Dhirubahi Ambani Enterprises, the Rs 5,387 crore Reliance Infocomm would gear up to take on the fierce competition in the telecom sector. To make the company more competitive, the media savvy and marketing suave Anil may opt for a management level makeover as few executives have moved to Reliance Industries Limited (RIL). There are also talks of a push to the IPO process.

President, Wireless Products and Services: S P Shukla

Area of Operation: Wireless, wireline broadband, ILD/NLD bandwith services, enterprise data access services

Address: Reliance Infocomm Ltd
Dhirubhai Ambani Knowledge City�
Navi Mumbai - 400709

Phone: +91 22 3037 3333

Fax: +91 22 3037 6615

Website: www.relianceinfo.com�


V&D estimates	CyberMedia Research

Highlights

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Posted profit of Rs 51 crore within two years after starting services

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Plans massive network rollout with 8,500 base stations covering almost 4 lac villages, 5,700 towns and cities

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Paid Rs 150 crore fine to DoT in the international call rerouting case

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Has backbone of almost 80,000 km of terabit optic fibre cable networks and 52,000 km under sea cable FLAG network

Reliance Infocomm posted a profit of Rs 51 crore in financial year 2004-05 mainly due to other income and exceptional items. However, in financial year 2003-04 the company posted a loss of Rs 390 crore.

Reliance is present in 22 circles, if its GSM and CDMA operations are taken together. With a mobile subscriber base of 10.45 million, the company grabbed a market share of 20 percent in less than two years of operations. The firm registered a 44 percent growth on the CDMA front, and 41 percent on GSM between March 31, 2004 and March 31 2005. In 2004-05, Reliance had 93,30,088 CDMA and 11,15,235 GSM subscribers.

The growth was more spectacular on the fixed wireless and wireline side. Year-on-year, it recorded a jump of 160 percent in the number of subscribers. On March 31 2005, there were 1,310,799 subscribers in this segment, as compared to 503,352 on March 31 2004.

Reliance Infocomm has been successful in bringing down its bad debt from Rs 436 crore in 2003-04 to around Rs 17 crore in 2004-05. This was mainly due to the deployment of a better system to check delinquency and sustained efforts to improve cash collection. Almost 80 percent additions in the pre-paid segment incrementally and migration of post-paid customers to pre-paid has also helped in checking bad debts.

However, the controversy surrounding the rerouting of international calls hit the company hard. In March 2005, Reliance Infocomm had to pay a fine of Rs 150 crore to the Department of Telecom as TDSAT upheld the DoT's contention that the private telecom player had violated license conditions. A company statement, however, denied that any violations took place and said it would establish that it was following license conditions.

In the days ahead, the fiercely competitive industry would evaluate every move Anil Ambani makes with regard to his company. Most certainly, the new boss of Reliance Infocomm would want to leave behind the disturbing events of the last few months and concentrate on providing better services for both the retail and enterprise segments. With GSM operators already on the drawing boards for 3G services, Reliance Infocomm will have to move fast and gets its act together.

"Simple tariffs and recharge plans have made customers stick to us"

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