India's two Reliance giants could go head-to-head in wireless
Reliance Industries buys Infotel, winner of national licenses for 2.3GHz
Published: 14 June, 2010
READ MORE: M&A | India | Reliance | LTE | WiMAX
India's auction of 2.3GHz BWA spectrum, concluded last week, is already proving more disruptive for the market's status quo than the larger 3G sale. While the 3G licenses mainly went to major cellcos, the broadband wireless licenses are held by several players which could help change the telecoms landscape. One is Qualcomm, which gained licenses in four 'circles' with a view to gaining a foothold for TD-LTE. And the only winner of nationwide spectrum, the ISP Infotel, is to be acquired by Reliance Telecom, creating a potential head-to-head between two carriers controlled by hostile brothers.
This has made Infotel the focus of intense speculation over future strategies. On the day of its win, it was a solid but little known provider committed to fairly conventional WiMAX-based fixed broadband access strategies, with mobile plans in the future. Now it has become a vehicle for Reliance Industries' re-entry into mobile services, after it spun off - and dramatically fell out with - its former stablemate Reliance Communications. The latter won significant spectrum in the 3G auctions (though no player gained licenses in all circles), and plans to build out HSPA: but failed in its bid to supplement that with BWA concessions, exiting the process a week before it ended, when the prices went too high for its business case.
Reliance Industries is a highly diversified business based on oil, and is India's largest private company by market cap. It has some activities in wireless equipment but largely left the telecoms market when its founders, brothers Mukesh and Ali Ambani, fell out, and Reliance Communications was separated. That company had previously disrupted the Indian mobile market by initiating ultralow charging structures. It now has CDMA and GSM networks, and subsidiaries focusing on corporate services, international WiMAX and others, plus the new 3G plans.
In recent years, the feud between the Ambani brothers has tied RCom's hands in expansion and left it as the only Indian wireless major with no international investor. A non-compete deal, which also gave the older company rights of first refusal on merger proposals, was signed in 2005 and scuppered plans for RCom to merge with South Africa's MTN. However, the terms have now expired, leaving both firms free to surge forward in wireless and even go head-to-head. RCom is likely to gain the boost of a major international stakeholder or even acquirer soon, with Etisalat, AT&T and MTN all rumored to be in talks.
Meanwhile, Reliance Industries, courtesy of Infotel, aims to make a "multibillion dollar investment in 4G". Many observers expect Mukesh Ambani to repeat the pattern with which he created what became RCom - slashing prices to undercut more established rivals. Another pattern of the early days was to reduce cost by using an emerging technology (the first time around he went for CDMA, and negotiated excellent prices for the then-untried platform).
Pages: 1 | 2
More M&A News
More INDIA News
More RELIANCE News
COMMENTS
Carrier Broadband Performance: Africa & Middle East
Carriers are using mobile broadband as their weapon of choice in the fight against the commoditization of voice and falling ARPU. This...
Voice over LTE: Market Analysis and Forecasts
VoLTE offer unique advantages in lowering a carrier's voice infrastructure economics and promises to improve voice quality, device...
Satellite Phones: Will Dual Mode Help the Phoenix Rise from the Ashes?
Satellite phones have followed an arduous path since their much-hyped launch more than a decade ago. The hype was followed by an e...
