Rcovl Lists At Rs.290 As Anil Rings The Bse Bell

[Arun 795]

RCOVL lists at Rs 290 as Anil rings the BSE bell

RCoVL worth $8 bn on debut

REUTERS[ MONDAY, MARCH 06, 2006 04:32:56 PM]

Reliance Communications debuted on the stock market with an $8 bn price tag, creating a top-15 listed Indian firm with access to the world's fastest growing and cheapest mobile phone market.

Spun off to shareholders of India's energy conglomerate Reliance Industries, Reliance Communications Ventures Ltd. ranks second in terms of mobile customers behind $17.5-bn rival Bharti Tele-Ventures Ltd, India's only other listed telecoms firm with a nationwide footprint.

India is home to the cheapest mobile phone tariffs anywhere, at between 2 and 3 US cents a minute for a local mobile call, and has over 83 mn wireless users -- more than the population of Germany.

A further 4.5 mn users sign up every month, and still only 8 of every 100 Indians owns a mobile phone.

The price was arrived at after the RCOVL chief Anil Ambani rang the ceremonial bell at the BSE.

Immediately after opening, RCOVL shares spurted on a good demand to touch Rs 309. At NSE, the scrip opened at Rs 298 and touched a high of Rs 307 a share within minutes.

In less than five minutes of opening over one crore shares of the company were traded at the two exchanges, demonstrating wider acceptability of the company and ADAG whose market capitalisation before the listing was pegged at Rs 53,000 crore.

The opening of RCOVL was with a market capitalisation of Rs 36,450 crore.

Just before the trading started, Anil recalled the family history including how his father Dhirubhai Ambani had launched the Reliance's maiden issue in 1978 for over Rs 800 crore a day after an issue of HLL.

Accompanied by his mother Kokilaben and wife Tina, Anil made an emotional address at the BSE.

"My mother had been the force behind the success of my father, some even said hidden force. Now she is the force behind the success of myself and my elder brother Mukesh in creating two independent Reliance groups. We will gain strength to strength and create world-class assets for prosperity of our shareholders."

The spin-off of Reliance Communications was part of the settlement of a dispute over control of the Ambani family's Reliance empire between brothers Mukesh and Anil Ambani.

Reliance Industries' 2.3 mn shareholders received 100 new shares in the telecoms firm for every 100 shares held.

Reliance Communications first day as a listed firm left it valued some way below Bharti.

Bharti trades at a price earnings multiple of 34 based on forecast earnings for 2005/06, compared with an estimated 28 for Reliance Communications based on third quarter results, analysts say.

Reliance Communications has a market share of 19.6 per cent, compared with 22.1 per cent owned by Bharti.

Reliance Communications is seeking shareholders' approval to raise the foreign fund holding limit to 74 per cent from 26 per cent. Analysts expect the process to take about two months, but they say it should boost the company's share price.

The firm is seen as having strong earnings growth prospects.

"Growth will come not only from voice, but from global bandwidth business and value-added services," said Deven Choksey, managing director at K R Choksey Shares & Securities, who sees 10 per cent growth in earnings before interest, taxes, depreciation and amortisation for 2006/07. Choksey forecast the stock could rise to 350 rupees in less than a year.

Reliance Communications is the holding company for top CDMA-operator Reliance Infocomm Ltd, GSM-services firm Reliance Telecom Ltd., bandwidth company Flag Telecom Ltd and Reliance Communication Infrastructure Ltd.

It is now also the listed flagship of Anil Ambani's Anil Dhirubhai Ambani Enterprises group, which also has interests in utilities, mutual funds, financial services and media.

Industry partners see the firm as a growth vehicle too. "Reliance is a great opportunity for us because of the scale, quality and size of its broadband infrastructure," said John Adelus, director of software giant Microsoft's Internet Protocol TV business for the Asia Pacific.

Microsoft expects to be a software provider for Reliance Communications' proposed new IPTV venture for the fast growing and potentially huge market.

With 19.33 mn phone customers, including 16.35 mn mobile users, Reliance Communications competes mainly with Bharti and with unlisted state-owned Bharat Sanchar Nigam Ltd.

Releasing results for the first time in late February, Reliance posted profit of 3.1 bn rupees on revenue of 33.27 bn for its fiscal third-quarter ended Dec. 31.

More than half the sales came from the wireless and 46 per cent from bandwidth and overseas calls services, analysts say.

In comparison Bharti, 30.8 per cent owned by Singapore Telecommunications Ltd, posted a quarterly profit of 5.45 bn rupees on sales of 30.26 bn.

Microsoft, Cisco extend support to RCoVL

Monday, March 6, 2006 (Mumbai):

Microsoft and Cisco Systems have extended support to Reliance Communications Venture Limited (RCoVL) for creating world-class infrastructure in India.

Broadcasting live message using IPTV (Internet Protocol TV) technology just prior to the beginning of trading, Steve Ballmer, CEO of Microsoft said, "We look forward to working with Reliance Communications to bring this exciting technology to consumers in India."

"In fact, this message is being delivered to you today on the stock exchange floor using the Microsoft T V IPTV platform. IPTV is an innovative new technology that enables communications services providers to deliver next generation television services that make TV viewing experience better and more personalised," he said.

In his message, Cisco Systems CEO John Chambers said his company and Reliance were working together to provide state-of-the-art infrastructure.

"Cisco and Reliance, together are working very closely in terms of providing next generation infrastructure as converged services come together in a world class means," Chambers said and congratulated Anil on the listing on RCoVL.

[sajokj 8]

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[SexyGurl 0]

It's a huge difference, in valuations between RCoVL and Bharti: $ 8 BN versus $ 17.5 BN !!!!

A fair target for Anil would be to try to beat Bharti at Market Cap.

And the match will almost surely be decided by whom-so-ever wins the race for subscriber additions. Till now, Bharti has managed to maintain an edge in subscriber additions ... though only by a small margin.

And the difficult part for Anil is, that, Reliance has more or less exhausted it's capacity to challenge the well-set older GSM players ... using heavy dozes of price-wars.

It did gain a foothold in the cellular market, courtesy it's price wars ..... but a decisive leadership position has remained elusive. (by which I mean, beating the largest GSM player by a factor of 2 -- which would mean Reliance should have had, about 35 million mobile subscribers).

Another news article stated that Reliance has currently 61,000 kms. of optic fiber cable compared to 30,000 with Bharti and 29,000 with Tata (VSNL) -- (I guess, Tata's number includes the lines leased from Bharti for 20 years). But this OFC advantage is proving to be limited, given National Long Distance tariffs have themselves become quite low .... and it may not be possible for Reliance to offer NLD at a significant pricing discount against what others operators offer.

SO, WHAT'S LEFT FOR ANIL TO DO ????

1) Not pricing discounts to competitors in the Voice market.

2) He has a lower brand perception than Hutch or Airtel.

3) Coverage is better than Hutch, but just about the same as Airtel.

4) R-WORLD !!! - sounds like a interesting key. No GSM is in a position to challenge Video-streaming ... as R-world does. But a problem with that is that the mass market just needs the voice services. Data Services are very largely restrictred to english-literate or some savvy local language people for video services.

5) Handsets: A long term weakness, compared to GSM .... but because of too many subscribers .... Anil should be thankful, it's not much of a headache for him. This off course, offers him nothing to take on the competition.

6) It's a retail market .... the fabled "crooked-way-out" out technique doesn't work. (or atleast i can't conceive such a thing).

LOOKS LIKE THERE IS NOTHING "POOR" ANIL CAN DO NOW.

Ummm.... ok, here's the best I could think of:

Anil should:

1. BRUTALLY CUT OPERATIONAL COSTS.

-- Standardize products. Reduce or eliminate the reasons why a customer would need to call customer-care.

2. Actually, Airtel's idea of outsourcing customer-care is not too bad -- but, it's quite late for reliance to do, now. What's the Plus????

THINK OF GETTING INTO BPO (call-center) BUSINESS. Use the experience of reliance call center, to earn REVENUE.

BPO is the fastest growing industry and reliance is well placed to start earning revenue fast, there.

3. WEBWORLD: Build the reliance brand around Webworlds. They have a very upmarket image. Too posh... and the sunk costs there, should be made to payup.

4. R-world: Is a plus for reliance. But already mentioned, it has some limited use.[

5. CONTINUE TO EXPAND COVERAGE: Rest all (above) are revenue earning items. This is the only thing that sukks money. But would pay well in the long run.

Edited March 6, 2006 by SexyGurl

[theking 35]

But any takers for increase in RIL prices suddenly today by Rs.16.20 !!

Wasnt it stagnant since long !

Edited March 6, 2006 by theking

[Arun 795]

here's Anil Ambani's replies to questions from the media after today's listing...

ADAE Group to invest Rs 15,000 crore in telecom in next 3 years

MUMBAI, MAR 6

Press Trust of India

Having emerged the third largest business entity after Reliance Industries and Tatas, Anil Ambani-controlled ADA Group today announced an investment of Rs 15,000 crore over next three years to expand its telecom operations.

"We shall be investing Rs 5000 crore annually for next three years to expand our Broadband, wireless and global telecom operations. The investments would be funded by a mix of internal accruals and debts," Anil Ambani, Chairman of ADA Group, told reporters here.

If required more capital expenditure, the Group has the capability to go for additional debts. Group's telecom business under Reliance Communication Ventures Limited (RCOVL), which was listed on bourses today, has a debt-equity ratio of 0.33-1.

This is besides an additional investment of Rs 500 crore for expansion of GSM-based operations in seven circles. This investment would be made over next few months, he added.

About the much-talked inducting foreign partner within permisible limit of 74 per cent FDI, Anil said "a large number of companies have come and spoken to us. We shall examine all the proposals keeping in mind the interests of our shareholders.

Claiming a subscriber base of 19 million, Anil said the group has network capacity to serve up to 30 million subscribers and additional investments have been planned keeping in mind company's plans to penetrate in new cities. "We can serve up to 30 million subscribers with an additional very small incremental cost," he said adding due to large base fixed cost have remained very low.

With a net profit of Rs 311 crore and revenues of Rs 3327 crore at the end of third quarter of 2005-06, Anil said wireless business contributed 50 per cent of the revenues, global operators 46 per cent while four per cent of revenue came from broadband operations.

Announcing a networth of over Rs 11,000 crore as on the date, Anil said this is after making a provision of Rs 4,400 crore for the period prior to March 31, 2005 due to bad debts, regulatory penalities and towards handset subsidies.

He also announced all telecom businesses, be it Reliance Infocomm, Reliance's GSM operations, FLAG and long distance operations, would be merged under RCOVL. This would enable to move towards simpler holding pattern, he said.

Asked who was the real competitor in telecom, Anil said "every private sector company competes with PSU... In our case also state owned BSNL will be our competitor company." About its netway project offering Internet Protocol Television, virtually live TV feed on mobile phone, Anil said "market trials are already on and it will be commercially available by the end of 2006.

[vmsanghrajka 0]

Anil Ambani-controlled ADA Group has announced an investment of Rs 15,000 crore over next three years to expand its telecom operations.

"We shall be investing Rs 5000 crore annually for next three years to expand our Broadband, wireless and global telecom operations. The investments would be funded by a mix of internal accruals and debts," said Anil Ambani, Chairman of ADA Group.

If required, the Group has the capability to go for additional debts. Group's telecom business under Reliance Communication Ventures Limited (RCOVL), has a debt-equity ratio of 0.33-1.

This is besides an additional investment of Rs 500 crore for expansion of GSM-based operations in seven circles. This investment would be made over next few months.

Foreign partner

About the much-talked inducting foreign partner within permissible limit of 74 per cent FDI, Anil Ambani said: "A large number of companies have come and spoken to us. We shall examine all the proposals keeping in mind the interests of our shareholders."

Claiming a subscriber base of 19 million, he said the group has network capacity to serve up to 30 million subscribers and additional investments have been planned keeping in mind company's plans to penetrate in new cities.

With a net profit of Rs 311 crore and revenues of Rs 3,327 crore at the end of third quarter of 2005-06, Ambani said that the wireless business contributed 50 per cent of the revenues.

Global operators contributed 46 per cent while four per cent of revenue came from broadband operations.

He also stated that all telecom businesses - Reliance Infocomm, GSM operations, FLAG and long distance operations, would be merged under RCOVL. This would enable to move towards simpler holding pattern.