Jio to spend another Rs30,000 cr on network enhancement

Reliance Industries Ltd will spend another Rs30,000 crore to enhance the network coverage and capacity of Reliance Jio Infocomm, taking the total investment in the telecom venture to more than Rs2,00,000 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 Rs30,000 crore last year too 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 Rs30,000 crore, it said in the notice. The telecom unit will offer 6,000 million 9 per cent non-cumulative optionally convertible preference shares of Rs50 each, including a premium of Rs40.

Reliance has already invested Rs1,71,000 crore in the unit that launched commercial services on 5 September 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 margin-denting price war.

The company has built a next generation 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.

A large number of customers could take to the Reliance handsets, expected to be launched by the Mukesh Ambani-led company at Rs999 and Rs1,500 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 Rs50 or converted to five equity shares at Rs10 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.