Anil Ambani's Statement At Reliance Communications' Agm 2009

[Arun 795]

This is an extract of the Chairman's Speech of the 5th Annual General Meeting of the Reliance Communications held on Tuesday, September 22, 2009

Video

It gives me immense pleasure to welcome each one of you to the 5th Annual General Meeting of our Company. This is our third annual meeting since listing, and we have had a number of achievements to our credit in a short span of 12 months.

Currently, we rank among the Top 5 telecom companies in the world by number of customers in a single country and are one of the leading private sector companies in India.

We have maintained strong momentum in existing businesses and opened up several new and substantial lines of revenue to drive leadership across the entire spectrum of our fully integrated and converged operations in India and the rest of the world.

Our focused initiatives over the last five years have brought to life the vision of our founder and my late father, the legendary Shri Dhirubhai Ambani, who saw affordable telephony as a powerful integrator of our great and diverse country, an enabler of economic prosperity for our people, and a bridge between the remotest Indian village and the farthest corner of the globe.

We pioneered India’s telecom revolution by galvanizing the CDMA operations. As a result, the number of Indians with mobile connectivity, which stood at a mere 13 million in 2003, shot up to 386 million in 2009.

Now, following the launch of our nationwide GSM operations, we are spearheading the next wave of growth in the Indian mobile services market. India has already added 130 million subscribers in 2009 and the momentum continues unabated.

Mobile telephony is shaping the lives of more and more Indians each day, bringing them closer to their families, friends and business associates, enabling them to achieve greater productivity and financial well being in their lives.

Today, a mobile has become a necessity, on par with such essentials as roti, kapda aur makaan. Nearly half of India has access to wireless connectivity. We believe it is our duty to bring the other half, representing underprivileged India, into the mainstream of inclusive growth by giving them the power of affordable connectivity.

Today, our nationwide DTH network brings family entertainment to people across thousands of towns. Our global submarine cable system connects over 60 countries, representing over 90 % of the Over the last few years, we have also brought an increasing number of emerging regions and countries in direct contact with the global community.

Our global network supports well over a thousand of the world’s international telecom operators use our network to connect their subscribers across the globe.

And most of Corporate India uses our fiber for IT and telecom connectivity.

Our dominant position across a range of businesses provides us with multiple growth platforms on a common infrastructure. Our chosen business model allows us to substantially leverage existing investments to drive diversified and profitable growth across current and new revenue streams.

Underlying these corporate initiatives is our total commitment to building a great enterprise for all our stakeholders and a great future for all Indians.

Reliance Communications: Business transformation

Some of you may be aware that Reliance was among the first few participants in the Indian telecom sector when it was first opened up for private participation in 1995. Subsequently, the company launched its operations in some circles in 1997. But we had to wait several years to see accelerated growth following the introduction of our CDMA services.

However, we remained significantly constrained on key financial indicators in those early years.

Based on the corporate restructuring of the Reliance Group four years ago, we took over a business that was saddled with substantial financial and operational challenges.

After an initial phase of consolidation, we have engineered a remarkable turnaround.

* Over the last two years, between FY 2007 and FY 2009, the number of subscribers on our network has increased from 28mn to 73mn.

* Currently, our subscriber base stands at 85 million, placing us among the Top 5 companies globally in terms of subscribers in a single country. We look forward to acquiring our 100 millionth subscriber before the close of this fiscal year.

* Over the last two years, we committed substantial investments in our business, rolling out the largest network expansion of its kind anywhere in the world in a record time. We have also more than doubled our asset base to over Rs. 102,000 crore in this period.

* Through this expansion process, we have maintained the stability of our margins.

* Today, we remain one of the most profitable telecom companies in the country and across emerging markets. As we derive the benefits of scale, we expect our margins to expand over the longer term.

* In FY 2009, our Net Worth exceeded Rs. 37,000 crore, making us one of the Top 3 companies in India.

* Despite substantial capex commitments of about Rs. 40,000 crore in just two years, our balance sheet remains strong. We maintain a conservative net debt-equity ratio of 0.53.

Our fast-track execution over the last two years has helped us complete several projects of significant scale. Our network presence as well as business visibility now stands enhanced, giving us the competitive edge of diverse technology, nationwide reach and limitless global markets.

Our strategy has been to execute several projects simultaneously, rather than sequentially, so as to accelerate our growth opportunities. As a consequence, our capex intensity peaked over FY 2008 and FY 2009. That phase of mega capital expenditure is now behind us.

We expect our capex to decline significantly starting this year, and continue on a downward trend in the future, particularly in relation to the scale of our expanding operations.

Our historical trajectory of massive pre-emptive capital expenditure will allow us to generate substantial revenues and free cash flows in the coming years.

This gives us a huge competitive advantage in a business as capital-intensive as telecom.

Group highlights

Let me briefly share with you an overview of the Reliance Anil Dhirubhai Ambani Group, of which Reliance Communications is an integral member and, in fact, the flagship company. As a member of the Group, we are the bearers of a proud name, and a prouder legacy.

We have established our leadership across a wide spectrum of high-growth, consumer-facing businesses:

* Telecom

* Financial services

* Energy

* Power

* Infrastructure

* Media and entertainment

Across different businesses, we touch the lives of over 150 million customers, or over 1 in 8 Indians, every single day.

Our group enjoys the implicit trust of nearly 12 million shareowners - the largest such family anywhere in the world.

We are among the biggest employers in the country, with a young, highly qualified and dedicated workforce of nearly 130,000 men and women.

In a short span of four years, our group market capitalization has reached Rs 170,000 crore, ranking us amongst the top 2 business houses in India.

* Our group assets have touched Rs. 180,000 crore

* Our group net worth is in excess of Rs 78,000 crore

* Our cash flows across the Group are over Rs 13,000 crore

* Our net profit is Rs 8,730 crore

My fellow shareowners, we have embarked on new avenues of growth and value creation. I seek your continued trust and support in the journey that lies ahead.

Reliance Communications: Leadership Position

Reliance Communications is India’s converged telecom service provider, with a largest fully integrated customer base of over 90 million individual, enterprise and carrier customers in India and across the world. We are also the second largest wireless company in India.

Our nationwide operations in India span the full spectrum of wireless, wireline, long distance, voice, data, video and Internet communication services. We also have a comprehensive international portfolio traversing long distance voice, data and Internet services in addition to bandwidth provision to customers across 60 countries in four continents.

Underlying this extensive range of best-in-class services is our pan-India, next generation, integrated and converged digital network, and a contiguous undersea and terrestrial optic fiber cable system covering markets that contribute 90 % of the global GDP. Our networks in India and the world span an aggregate length of over 277,000 route kilometers.

We are the only telecom operator in India offering nationwide wireless services on both CDMA and GSM technologies across 24,000 towns and 600,000 villages. Our nationwide reach of over one billion Indians is by far the widest for any operator in the country, and covers 95 % of all roads, rail routes, and highways. Our Number 1 position in the wireless data business stands further enhanced following the launch of fastest wireless internet connectivity.

We have an undisputed leadership in the PCO segment, with over 2 million call offices across the country. These initiatives have allowed us to provide communication access to a large number of people across our towns and villages. Apart from the strong business proposition in the provision of these services, we continue to contribute to the national objective of stimulating inclusive growth at every level of society.

We bring connectivity to the homes and offices of over 6 million subscribers across the country on Fixed Wireless Phones (FWPs), of which we are the largest provider on our wireline broadband network.

Our wireless networks support a diverse range of commercial applications including ATM connectivity and point of sale terminals.

We are the largest provider of value added services in the country. Reliance Mobile World allows our wireless subscribers access to the most comprehensive range of VAS applications and over 200,000 content titles on their handsets, be it downloading the latest Bollywood ringtones, watching T20 cricket matches live, searching for information on restaurants and cinema halls, or instantly transferring money to relatives across the country. We connect every location in India through our domestic long distance calling services. Our domestic long distance network now extends over 190,000 route kilometers, by far the most extensive in the country. Our international service footprint, riding on 87,000 route kilometers of connectivity on our next generation network, allows subscribers of most of the leading global telecom companies to make calls to 200 countries worldwide. Our calling cards provide affordable international voice connectivity to over 2 million people in eight countries and cost-effective roaming to Indians traveling to over 100 countries.

Through organic growth and key acquisitions, we have expanded the value proposition to our global customers beyond the provision of bandwidth capacity over the last three years. Today, in addition to meeting the bandwidth requirements of over 800 telcos, including such leading international operators as Verizon, Sprint, Deutsche Telekom and BT, we service the needs of more than 2,100 enterprises globally with a comprehensive bouquet of managed and value-added services, quite literally making us the backbone of international commerce. In India, we have one million buildings -commercial, retail and residential - connected to our intra-city optic fiber Ethernet network spanning 30,000 route kilometers. Across 44 leading Indian cities, we provide fiberized connectivity right up to the building without the bandwidth constraints faced on competing networks.

Over 900 of the Top 1000 enterprises, Indian and MNC, operating in India are today our customers. We manage their critical communications, networking and IT infrastructure requirements through long-term partnerships. We have also extended our enterprise solutions portfolio to small and medium enterprises through WiMAX based connectivity in India’s top 10 cities.

We have a position of leadership in data center services in India, with a capacity of over 300,000 square feet at 6 locations in 3 cities, and over 60 % share of the market. We see strong, long-term growth potential in this space as data demand expands in India. We plan to expand our capacity to over 1 million square feet of space across multiple locations nationwide to address this opportunity. This expansion will place us among the leading IDC service providers globally.

Reliance Infratel, our passive infrastructure subsidiary, has by far the largest tenancy capacity on its towers. This infrastructure already supports our nationwide CDMA and GSM networks and will also enable us launch nationwide 3G and WiMAX services in the near future. In addition, we are benefiting from the infrastructure requirements of new entrants in the sector who are setting up their networks. We have significant value creation and enhancement plans in this business that I shall discuss with you in greater detail.

Our integrated service approach brings a comprehensive portfolio of services to our customers including tower infrastructure, backhaul to the network, long distance connectivity and a host of other services. The recent transfer of optic fiber assets to our subsidiary, Reliance Infratel, has brought our entire passive infrastructure portfolio under one entity, enabling an efficient organizational structure from both customer acquisition and organizational cost perspectives.

Our portfolio of products and services is supported by one of the most extensive and powerful nationwide retail distribution networks in India. The backbone of our retail presence is constituted by more than 2,300 exclusive Reliance World and Reliance Mobile Stores spread across 700 cities over 1.3 million square feet of retail space. In addition, our preferred retailers allow us to extend our branded retail presence to over 7,000 towns nationwide. This network is augmented by over 1 million retail points across the country.

These facilities are backed up by multi-lingual, multi-location call center facilities that employ over 13,500 people and provide live, 24x7 support to our wireless, FWP, datacard, broadband, DTH and enterprise customers. We live in the age of convergence. Technology evolution dictates our business as well as our lives. We believe that traditional telecom businesses need to re-invent themselves, to embed their presence in the lives of their customers. This is the position we would like our business to reach on our fully integrated and converged growth platform.

We are operating on multiple drivers that provide long-term growth visibility vis-

As we launch new businesses on the framework of our existing network infrastructure investments, we are best positioned to derive value from emerging opportunities in telecom, media and entertainment and Internet domains.

Performance Review

Our Company’s standalone st March 2009, along with the and consolidated accounts for Directors’ Report, Letter to Shareholders, Management have been circulated to all of you.

With your permission, I would like to take them as read.

I will now share with you a brief summary of our strong financial and operating performance for the fiscal year ended 31st March 2009 compared to the fiscal year ended 31st March 2008.

* Total Revenue up from Rs. 19,068 crore to Rs. 22,948 crore, an increase of 20%.

* EBITDA up from Rs. 8,215 crore to Rs. 9,305 crore, a rise of 13%.

* EBITDA margins at 40.5%compared to 43.0 % last year, despite the launch of our nationwide GSM network.

* Net Profit up from Rs. 5,401 crore to Rs. 6,045 crore, higher by 12%.

* Earnings per Share up from Rs. 26.32 to Rs. 29.29.

* Total Assets up from Rs. 77,459 crore to Rs. 102,207 crore.

* Net Worth up from Rs. 25,461 crore to Rs. 37,059 crore.

All our business segments delivered strong financial numbers for the year ended 31st March 2009. Our segment-wise numbers for the period ended 31st March 2009 are as follows: Our Wireless business recorded revenues of Rs. 17,368 crore and EBITDA of Rs. 6,674 crore.

Our Global business recorded revenues of Rs. 6,791 crore and EBITDA of Rs. 1,625 crore. Our Enterprise business recorded revenues of Rs. 2,524 crore and EBITDA of Rs. 1,158 crore.

Our strong balance sheet has been further strengthened by a series of specific financial initiatives. We have repurchased our Foreign Currency Convertible Bonds (FCCBs) with face value of approx Rs. 320 crore (US$ 64.7 million) in different tranches at a discount to their face value. As a result, we have reduced our repayment liability by approx Rs. 410 crore (US$ 82.6 million) at the close of the five-year period.

More recently, we have prepaid higher cost rupee-denominated debt of Rs. 6,200 crore, nearly three years before schedule. In the largest pre-payment exercise of its kind in India, we have used our strong cash position and internal accruals to prepay this debt and expect the de-leveraged balance sheet to generate interest savings of hundreds of crores of rupees, starting in the current fiscal.

We have also received overwhelming approval from all of you, fellow shareowners, for an enabling QIP resolution that will give us even greater financial flexibility and strength. We will consider the placement at an appropriate time.

Let me now share with you details of a major value creation initiative for our shareowners.

We will shortly file the Draft Red Herring Prospectus of Reliance Infratel, our passive infrastructure subsidiary, with the Securities and Exchange Board of India (SEBI).

This will be followed by the initial public offering in which Reliance Infratel will offer 10 % of its equity to investors.

As you know, we were the pioneering Indian telecom company to demerge our passive infrastructure into a separate entity more than two years ago.

It is a measure of our leadership in the industry that others have tried to emulate our example, and follow suit. Our decision to demerge was guided by the need to keep ourselves asset-light, improve our return on equity and create value for our shareholders.

In July 2007, we divested 5 % of Reliance Infratel for about Rs. 1,400 crore (US$ 337.5 million), generating capital gains of over Rs 1,200 crore for you, our shareowners.

This deal attributed an equity value of about Rs. 27,000 crore (US$ 6.75 billion) to the company, amounting to Rs. 135 for every share of Reliance Communications.

We have come a long way since then and made substantial progress in our telecom infrastructure business.

* At the time, we had barely 15,000 towers in our portfolio. Today, we have three times that number at over 48,000 towers - and increasing.

* At the time, we were the sole occupiers of our multi-tenancy towers. Today, we host the telecom electronics of a growing number of other operators on our towers, including Etisalat DB, S Tel, Aircel, Tata Teleservices, MTS and others.

* At the time, we utilized barely 20,000 tenancy slots on our multi-tenancy towers. Today, the occupancy on our towers stands at around 75,000, a number that is set to more than double in the next three years, driven both by our own internal requirement and that of a large number of new and existing operators.

* The unprecedented value that Reliance Infratel represents is dramatically reflected in the results. In FY 2008, we had a revenue of Rs 1,500 crore. In FY 2009, that revenue has gone up by over 200 % to Rs 5,000 crore. In the same time period, the net profit has expanded by 400 % to touch Rs. 1,700 crore.

As shareholders of Reliance Communications, you will continue to own 85 % of Reliance Infratel following its IPO and in turn benefit substantially both from its growing business equity and its expanding valuation.

Economic Growth and the Indian Telecom Sector

Over the last fiscal year, the unprecedented turmoil in the global economy escalated into a deep crisis across financial markets, bringing economic activity worldwide to a standstill. Tight liquidity conditions led to widespread global cutbacks in investment commitments and a flight of capital from emerging markets.

As an increasingly important participant in the world economy, India too saw a deceleration in its growth momentum of the last five years. But thanks to the inherent strength and resilience of the Indian economy, we managed to escape the worst of the adverse global conditions. The recent signs of renewed growth and stability in the world’s major economies will add further impetus to While the growth estimates for FY 2009 stood revised downwards to less than 7 %, India will, despite a poor monsoon, grow at nearly 6 % in FY 2010. We believe that India will be one of the key drivers of the global economy in the coming years.

Throughout last year, as global weakness impacted economic activity in India in sector after sector, the telecom industry maintained its high growth trajectory, delivering another strong performance. Driven by wireless expansion, India remained the fastest growing telecom market in the world. As I speak to you today, the Indian telecom sector has already acquired its 500 millionth subscriber - a full year ahead of the timeline set by the Government, and the momentum continues unabated.

Adoption of wireless mobility services has been driven by expanding network coverage, falling handset prices and highly competitive calling rates. By providing a pro-consumer and pro-competition operating environment, the Government’s policy framework has rapidly increased tele and breadth of our country.

Indeed, the continuing fall in the price of mobile services has been one of the few bright spots for the common man in a year marked by rising inflation.

India has by now perfected its own unique telecom business model that thrives on providing the common man or aam aadmi the lowest cost access anywhere in the world. An economic lifeline for telecom connectivity has emerged as the single biggest catalyst in realizing our dreams of creating an inclusive growth environment. While the pace of expansion has been spectacular, there remains abundant headroom for growth since many regions of the country are still significantly under penetrated.

In addition to the expansion of mobile voice market, we see significant opportunities across a range of businesses from mobile value added services to enterprise IT, from long distance voice and data services to Internet data centers, from consumer broadband and, home entertainment to telecom retailing and related businesses.

Regulatory Framework

Telecom is without doubt India’s greatest success story of policy framework adopted by the Government has acted as a strong catalyst in this process.

Starting with the decision to transition from fixed fee to revenue share and extend the initial licensing term to 20 years, policy decisions have allowed industry participants - both operators and subscribers - to derive the full benefit of a robust telecommunications eco-system.

The Government has adopted a policy of technology neutrality for telecom licenses. Following our concerted effort, all telecom operators are rightly allowed to use any technology of their choice.

Many of the incumbent operators tried to prevent the advent of more competition by initiating legal action. However, TDSAT upheld our stance by allowing DOT to award licenses to new operators, and revise subscriber-linked spectrum allocation criteria. Radio spectrum freed up as a result has allowed several operators including Reliance Communications to launch services across the country.

In addition, the Government has:

* Implemented a complete phase-out of Access Deficit Charges paid to state-run telecom companies;

* Allowed passive and active infrastructure sharing and intra-circle roaming between multiple networks that has opened up significant new opportunities for strong existing players such as Reliance Communications;

* Significantly reduced mobile termination charges leading to a level-playing field for all operators and a lower cost of connectivity for mobile subscribers;

* Reduced service tax from 12 % to 10 %;

*

Provided a clear timeline on Mobile Number Portability that will in the next few months allow those of us who are not already Reliance Mobile subscribers to experience our superior customer experience without changing their phone numbers;

* Decided to auction 3G and Wireless Broadband Access spectrum, which is likely to usher in a new era of high-speed data access, high quality voice and high-end multimedia applications on mobile phones, resulting in a world class consumer experience.

* In addition, TDSAT’s judgment stipulating that operators MHz under their license agreement has, along with revised and stricter subscriber-based norms for spectrum allocation, paved the way for a more even level playing field for all operators.

As expected, many of these initiatives faced strong opposition from vested interests keen to maintain their incumbency advantage in an oligopolistic business environment. However, we remain confident that the authorities will continue to strengthen the current progressive regulatory environment. We look forward to rapidly growing our operations within an eco-system that promotes efficient utilization of resources to bring affordable connectivity to every Indian.

Let me now turn to our key operating segments and some of our new initiatives. Key Operating Segments and New Initiatives Wireless Our Wireless business constitutes mobile and fixed wireless operations.

As on 31st March 2009, we had 73 million subscribers on our wireless network, which has further increased to 85 million subscribers at present. We added 27 million subscribers during FY 2009, an increase of over 51 %. We are among the Top 2 wireless operators in the country.

As before, pre-paid subscribers contributed most of our growth. We added over 26.7 million prepaid subscribers in the last financial year, representing over 99.5 % of our wireless subscriber growth.

Our subscribers consumed over 27,000 crore wireless minutes nationwide last year. That constitutes a growth of 35 % and amounts to well over 5 lakh years of continuous talk time!

During the previous year, we rolled out our nationwide GSM wireless services in a record time by completing the largest and most extensive network expansion of its kind ever undertaken in the world. From the time of spectrum award to the first subscriber acquisition, the massive roll-out project was concluded in a span of barely 11 months.

Let me take you through some of the other highlights of this launch which has set entirely new standards of affordable connectivity.

We have once again rewritten the rules of the industry by offering our customers an unbeatable proposition in terms of coverage, quality, service breadth and, above all, value for money.

The rapid ramp up of network and launch of GSM services was made possible by leveraging the substantial synergies between our existing CDMA and new GSM operations. Both these networks operate on common, technology-independent infrastructure including telecom towers, network connectivity, long distance infrastructure, sales, distribution and retail network, back-end call center and BPO support. Apart from cutting the time-to-market of our GSM launch, this has also enabled us rationalize our capital expenditure significantly, making the new network profitable from Day One, in line with our existing wireless profitability.

Following the GSM launch in January, our highly innovative Customer Experience Program enabled new subscribers to access our high quality network by using free promotional minutes.

Subsequently, following our commercial launch in April this year, we have seamlessly transitioned our rapidly expanding GSM subscriber base to a unique range of plans that offer significant value across every level of usage. In the eight-month period from January to August since we launched our GSM services, Reliance Mobile has emerged as the clear No. 1 Mobile Brand. We have added about 23 million subscribers in this period representing 21 % share of the net subscriber additions across the industry ahead of all competition. This validates our entry strategy and the continued value that we continue to bring to our subscribers on a superior network experience.

A consumer product launch in our country, even on a scale smaller than in telecom, is usually supported by advertising spends running into hundreds of crores of rupees. Our innovative and unconventional strategy used airtime minutes as a highly effective currency to launch our nationwide service without any significant spend on advertising and promotions.

Our network now covers over 24,000 towns and over 600,000 villages on our latest generation EDGE GSM network, offering the highest quality digital voice and data services. This includes coverage of 95 % of all rail routes and highways in the country, traversing well over 270,000 kilometers. As a result, our network goes much deeper and farther than any other in the country.

Independent market surveys have shown that mobile users in India continue to experience congestion, dropped calls, low voice quality and breaks in coverage on many of the existing networks. These unhappy subscribers are increasingly switching to Reliance Mobile to access clear voice signals as well as high speed data applications throughout the country.

While our new GSM network offers the unparalleled benefits of a congestion-free network and flawless voice quality, we also enjoy all the benefits of being an incumbent operator on CDMA with a substantial base of customers.

We have leveraged the spectrum efficiency of CDMA technology to create a unique range of high-utility, high-affordability services. For our wireless customers, we have introduced long distance calling plans which have revolutionized STD calling patterns and usage across the country. Our unlimited free STD calls plans bring unprecedented benefits to our customers across post-paid, pre-paid and fixed wireless usage categories. We continue to gain traction on other unique product offerings in the CDMA segment - fixed wireless phones in the urban markets and PCOs in rural areas - supplementing our mobile customer base.

On the rural front, we have launched a major initiative is the form of a joint venture with Krishak Bharati Cooperative Limited or KRIBHCO. The latter ranks among the largest rural marketing companies in India with a reach and distribution spread that cuts across almost every state.

This joint venture will aggressively market our telecom products and services, giving us greater distribution power in rural areas. This is significant because the next big wave of subscriber growth in India will take place in the rural hinterland. Our pioneering initiative in reaching the rural subscriber in his own backyard will yield long-term value. The last financial year also saw us introducing top-of-the-line high end handsets, including BlackBerry and HTC, on our CDMA platform expanding the options available to our subscribers.

More recently, we have launched the next version of our high-speed data services branded Netconnect Broadband Plus with data speeds of up to 3.1 mbps. This service allows PC and laptop users the convenience and mobility to do online surfing, chatting or downloading at broadband speeds in 35 major Indian cities that represent 85 to 90 % of our PC population.

Connectivity on this service is further supplemented by our nationwide wireless data services connectivity on the CDMA 1X wireless network. This has made the whole country a contiguous hotspot for our data customers. Going forward, we expect data services to provide the key USP in driving sustainable competitive advantage on our CDMA pan-India network, with diverse data applications providing the necessary functionality to meet this objective.

As a consumer brand, our greatest asset is the trust of our subscribers. I am happy to share with all of you that Reliance Mobile has been independently rated as ‘India’s Most financial daily in its Annual Brand Equity Survey; a testimony to the immense trust which millions of our consumers repose in us every single day.

We believe it is this very trust that will be of significant advantage as we expand our customer value proposition by bringing them an entirely new experience of high speed voice, video and data on 3G and WiMAX platforms next year.

We are currently evaluating our participation in both the 3G and WiMAX auctions, which are scheduled to take place towards the end of this year.

Let me now share with you the key developments in our passive infrastructure subsidiary, Reliance Infratel.

Reliance Infratel.

Last year, we expanded our portfolio of multi-tenancy towers to 48,000. We have now added 35,000 towers over the last two years, creating the largest supply base of plug-and-play telecom infrastructure - both for our internal network expansion and for the use of operators who are launching their wireless services in the country now. We expect the demand for passive telecom infrastructure to more than double in the next couple of years and believe that we are best-positioned to address this opportunity.

We offer a unique market proposition to our customers. In addition to multi-tenancy telecom towers, Reliance Communications can also provide integrated solutions including radio and network electronics, fiberized backhaul, long distance transport network, BPO services, IDC hosting and IT solutions. This creates an additional and very profitable revenue opportunity for us. We have recently transferred our optical fiber division to Reliance Infratel to bring the larger market proposition under the same legal entity and create greater cost synergies.

In July this year, we signed a long-term, infrastructure sharing agreement with Etisalat DB valued at over Rs. 10,000 crore for a minimum period of 10 years. Under the agreement, we will provide a wide range of services, including passive infrastructure and transmission services. This is by far the largest such infrastructure sharing contract signed in India by scope, size and value, further demonstrating the unique and unmatched advantages of our infrastructure.

Last month, we concluded an agreement with another new operator S-Tel, to provide it telecom infrastructure in 6 operating circles.

In addition, we have signed up with a number of other leading players, including Aircel, Tata Teleservices and MTS, for tenancy on our passive infrastructure. Several other agreements are in the pipeline.

These contracts represent a very significant and profitable incremental revenue line for Reliance Communications with strong and growing visibility of business engagement over the next several years.

Reliance Globalcom

Reliance Globalcom offers a diverse portfolio of global communication services, including global voice, managed networks, carrier Ethernet, and fiber capacity.

Reliance Globalcom is participating in the substantial growth opportunities generated by the increased usage of telephony globally - both voice and data - as distances shrink and the people across the world collaborate closely. We have a diverse customer base across the developed world and in a growing number of emerging markets. This gives us a significant head start in this rising demand environment.

During the last fiscal year, our ILD and NLD operations delivered considerable expansion. We grew our share of the market as the number of minutes flowing through our network touched 4,000 crore as compared to 3,000 crore minutes in the preceding year.

Our national long-distance carriage business grew 38 %. Through the year, we maintained the highest growth rate in the industry and now handle a significant share of the domestic NLD traffic in the country.

There is currently a strong demand for NLD bandwidth and infrastructure across operators. We are targeting a revenue share of over Rs. 2,000 crore out of the addressable market of Rs. 5,000 crore over the next two years as several new wireless operators launch their operations and new technologies such as 3G and BWA establish their presence.

We have a base of over 2 million retail customers internationally, who subscribe to our virtual calling card services in the US and across other developed markets. This is by far the largest subscriber base outside India for any Indian company.

Reliance Global Call customers make international calls to India and 200 destinations worldwide from the US, Canada, UK, Australia, New Zealand, Hong Kong, Singapore and Malaysia.

Our flagship product, Reliance Global Call continues to grow from strength to strength. We added more than 500,000 customers on this platform in the previous fiscal and command over 75 % market share of calls made to India.

On the data side, following the acquisitions of Yipes Holdings and VANCO Group, Reliance Globalcom has made a significant transition from being a bandwidth provider to being a managed services company offering the full range of solutions to global enterprises and telecom carriers. Our vision is to create one of the top five global data communication enterprises.

The UK-based VANCO Group is a global managed network services provider, and is recognized as a top 5 global player along with AT&T, BT and Verizon. We acquired VANCO for about US$ 80 million - less than 10 % of the value it commanded just a few months prior to its acquisition. VANCO brought with it, apart from a network presence in 230 countries, secure, long-term contracts with over 220 of the 700 carriers, based largely in developed markets such as the US, UK, France and Germany.

Following the acquisition, we undertook a consolidation and cost optimization exercise that involved synergizing VANCO’s operations with Reliance Globalcom and off-shoring compromising the customer experience.

The new Reliance Globalcom already derives over 70 % of its new business from network and value added services.

We are committed to further expanding the scope and scale of our business. Our Next Generation Network expansion covering the Mediterranean and trans-Pacific segments will take multi-terabit optic fiber cables to many key global emerging markets this fiscal. We also aspire to become the largest WiMAX operator in global emerging markets and are making relevant investments to back our ambitions.

I will now move to a discussion of our Enterprise business.

Enterprise

We offer the most comprehensive range of office telephone solutions, data networking, Internet and IT infrastructure services to premier global and Indian companies, addressing their telecom, connectivity and automation requirements.

We serve 900 of the top 1000 companies in India and remain the premium integrated solutions provider for top enterprises.

We have maintained our leadership position in the largest and fastest-growth segments of the market including MPLS VPN, Centrex and IDC Products. We continue to increase our share of wallet from existing relationships and new acquisitions, which is reflected in the growing repeat business and the new order book position which is twice that of last year’s level.

Despite the increasingly competitive environment, we have maintained a market share of over 50 % of new spending on IT and telecom connectivity by the country’s During the year, the number of buildings on our network increased to nearly 1 million. We have over 360 prime business districts in the largest metropolitan regions connected on our nationwide broadband network, which covers almost the entire enterprise universe in the country.

In addition, we continue to connect thousands of premium residential buildings every quarter. This allows us greater access to individual customers and enables the expansion of our existing wireless broadband (WiMAX) business in the top 10 cities in the country.

Home

Our Home business comprises Direct to Home (DTH) and soon-to-be-launched IPTV services. These services target one of the largest and fastest growing markets for pay television services in the world.

India’s TV viewership is already the second largest in the to grow rapidly as TV penetration expands from the current 65 %.

Of these 130 million TV households, 90 million currently have access to cable and satellite services. Cable in India, as we all know, largely comprises analog systems operated by small, unorganized players providing limited and low quality access to television content available over the Indian skies.

Reliance Big TV was launched nationwide last year, with the latest, state-of-the-art MPEG 4 technology. Our modern, technologically-advanced network brings DVD quality pictures to viewers, with a bouquet of over 200 channels, which can be further expanded to over 400 channels in future.

Our on-demand channels operate like a virtual mega multiplex, simultaneously bringing over 32 movies to viewers. We will soon be the only television platform offering high definition (HD) television content, bringing an exciting and totally flawless viewer experience to our living rooms.

This will further strengthen our position as the premium operator in this space. Human Capital We take pride in being one of the largest integrated telecom operators in the country.

We believe that our people are the most valuable asset and the core of our customer-centric organization. The quality and commitment of our human capital that has been a significant differentiator in our evolution as an organization and in our ability to expand our foot print across multiple and diverse business segments. Our 50,000-strong workforce is among the youngest and best-trained in the country, fostered by a vibrant work culture based on meritocracy, team work and mutual respect. With an average age of 31 years, our workforce is an optimum blend of technocratic merit, financial acumen and management expertise.

In the last fiscal year, we undertook several initiatives in the areas of talent acquisition and retention, capability enhancement and performance management. These initiatives have been the key drivers for enhancing people productivity, morale and motivation.

Our effort is to develop global leaders by providing opportunities to learn through a comprehensive framework of continuing education and challenging assignments in different businesses and geographies.

Our HR is agile and responsive to emerging market dynamics and business environment. We have a positive, pro-active and prudent approach to people issues, benchmarking ourselves to global best practices, while remaining sensitive to local contexts.

In the past year, our HR has successfully implemented some unique initiatives in the areas of empowerment, delegation, learning management and leadership development.

We revisited the organizational structures of our various businesses for higher customer delivery, efficiency and productivity. This facilitated exciting growth opportunities for quality talent, thereby aligning aspirations to the organizational goals.

Apart from compensation which matches the best in the business, we are committed to offering a work environment that is conducive and enriching for all our people.

Corporate Governance

As a part of the Reliance ADA Group, our company is committed to upholding the highest standards of corporate governance and best global practices with a view to protecting and enhancing We believe in transparency, accountability and equity in all facets of our operations, and in every interaction with our diverse set of stakeholders - from shareowners, employees, customers, vendors to government and society. Our governance practices seek to go beyond statutory and regulatory requirements to embrace the true spirit of responsible, aware and ethical corporate conduct.

We believe that adopting responsible and sustainable governance practices, we can make a strong contribution to our operating environment. This, in turn, can lead to a range of benefits which may not be immediately evident but which can, over time, yield substantial value through increased accountability to stakeholders.

Customer Service

Our growth story is strongly enabled by our focus on the customer. We are taking important steps to institutionalize ever higher service standards, while strengthening customer centricity across the organization. As I mentioned earlier, Reliance Mobile has been voted "India’s Equity 2009 Survey conducted by the country’s foremost pride for us and has strengthened our core belief that in our business there can be no better strategy than a satisfied customer.

We have now expanded our BPO capacity to 17 centers located in 14 cities to serve our rapidly growing subscriber base and provide support in 14 regional languages. Reliance BPO is the only captive Indian BPO managing customers across five continents covering Asia, Africa, Europe, Australia and North America with more than 13,500 customer care executives.

Our customer care executives handle more than 1.3 lakh calls every single day. This number is in addition to the over 8 lakh calls which are serviced through Interactive Voice Response (IVR).

Due to our continued and intense focus on customer care, we currently have the lowest postpaid churn in the industry at 1.9 % and the lowest bad debts position at less than 2 %.

Conclusion

India’s spectacular telecom growth story has been a key driver proud to say that Reliance Communications has been one of the torch bearers of this great transition.

As our telecom network reaches the previously unconnected hinterland, giving millions upon millions of Indians a view of the world beyond, we sense a new mood of hope, aspiration and empowerment across the country. Playing a lead role in this great unfolding story of growth and fulfillment has been the greatest reward of the last few years.

* Less than four years back, we acquired our 10 millionth customer.

* By the end of this year, we look forward to acquiring our 100 millionth, making us part of an exclusive club of top global operators.

* Over the last 2 years, we have brought over a billion people under our network coverage. Today, we are making a difference to their lives.

* It took our network five years to reach 10,000 towns.

* Today, we are supporting almost every telecom operator in the country reach the remotest parts of India.

* Four years ago, we took our first tentative steps outside the country.

* Today, our global networks are connecting regions and countries that contribute 90 % of the GDP.

* Till a few years ago, our focus was confined to phone calls made by retail customers. Today, we are enabling 2,100 leading global enterprises do business across the world.

* Over the last two years, we made massive pre-emptive capital expenditure of over Rs 40,000 crore to support our ambitious growth plans.

* Today, with the peak of our capex cycle behind us, we are expecting to reap the substantial benefits of these investments in the form of strong cash flows and superior customer experience.

* The last two years have represented a transformational phase in the life of our young company.

Today, as newer operators jostle to get a share of the Indian mobile pie, we are leading of convergence - bringing digital connectivity on a wide variety of formats - be it music, video, TV, movies, radio, gaming, advertising, internet, e-commerce, applications, or just the ordinary phone call.

We believe that our future, as that of a billion plus people of India, would be shaped by integration and convergence.

As India’s largest fully integrated and converged telecom the most of this extraordinary transition.

Our Commitment

As a member of the Reliance Anil Dhirubhai Ambani Group, Reliance Communications draws inspiration from the life and legacy of our legendary founder and my father, the Late Shri Dhirubhai Ambani.

We remain committed to upholding his vision of building an enterprise committed to the highest standards of quality, strong operational performance, substantial value creation, and a deep entrepreneurial spirit.

Acknowledgements

Before I end, let me acknowledge the contribution of our various partners in success.

My heart-felt appreciation to all colleagues for their professionalism, dedication and commitment. My sincere thanks to the Board of Directors for their continued support, encouragement and guidance. Thank you, ladies and gentlemen, for your time, patience and attention.

[Arun 795]

Anil Ambani foregoes salaries from 5 group companies

23 Sep 2009, 0041 hrs IST

Economic Times

Anil Ambani has foregone his salary and commission from five group companies amounting to Rs 53 crore last year “in the best interest

of shareholders’ returns,” after the global economic crisis, Mr Ambani told the Reliance Communications shareholders.

The list of the companies from where he was supposed to draw commission and sitting fees include Reliance Communications, Reliance Power, Reliance Capital, Reliance Infrastructure and Reliance Natural Resources.

[pasumark 51]

It is funny to read his statement on Reliance GSM

" In the eight-month period from January to August since we launched our GSM services, Reliance Mobile has emerged as the clear No. 1 Mobile Brand."

"Our network now covers over 24,000 towns and over 600,000 villages on our latest generation EDGE GSM network, offering the highest quality digital voice and data services. This includes coverage of 95 % of all rail routes and highways in the country, traversing well over 270,000 kilometers. As a result, our network goes much deeper and farther than any other in the country."

:'( :'( :'(

[Anil_S 6]

It is funny to read his statement on Reliance GSM

" In the eight-month period from January to August since we launched our GSM services, Reliance Mobile has emerged as the clear No. 1 Mobile Brand."

"Our network now covers over 24,000 towns and over 600,000 villages on our latest generation EDGE GSM network, offering the highest quality digital voice and data services. This includes coverage of 95 % of all rail routes and highways in the country, traversing well over 270,000 kilometers. As a result, our network goes much deeper and farther than any other in the country."

:'( :'( :'(

Annual reports & such statements, you have to read in between the lines.

He is refering to GSM network( since we launched our GSM service) and talking about Reliance Mobile (CDMA+GSM). (ur network now covers over 24,000 towns and over 600,000 villages)(CDMA+GSM)

Edited September 23, 2009 by Anil_S

[vvinayakpai 26]

Anil Ambani foregoes salaries from 5 group companies

23 Sep 2009, 0041 hrs IST

Economic Times

Anil Ambani has foregone his salary and commission from five group companies amounting to Rs 53 crore last year “in the best interest

of shareholders’ returns,” after the global economic crisis, Mr Ambani told the Reliance Communications shareholders.

The list of the companies from where he was supposed to draw commission and sitting fees include Reliance Communications, Reliance Power, Reliance Capital, Reliance Infrastructure and Reliance Natural Resources.

This is a precursor to the Infratel IPO which is expected soon.

Remember, just after the Reliance Power IPO had bombed at the bourses, he had transfered a personal stake in RPOWER to the shareholders of Reliance energy so that their interests are not violated. This, I think is a gimmick too, to entice the shareholders that nothing of that sort would happen this time.

[Harshal 11]

Well the market has already started to build up momentum. I think Anil will again bring in his IPO at the peak to get the best valuation and then the market can go BOOM again.

[Greatest 55]

I am loving this... An Ambani, quoting another Ambani... No hard feelings Harshal..