Reliance Communication Completes 6 Month Corporate Reorganisation

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Mumbai, September 8, 2006

Reliance Communications Limited (“RCom”) announced the completion of its corporate reorganisation plan initiated in March 2006, in a record period of less than 6 months from the listing of the Company. The orders of the Hon’ble High Court of Bombay approving the reorganisation have been filed with the Registrar of Companies, and the stock exchanges.

RCom has now become the primary operating company for the entire telecom business. RCom and its wholly-owned subsidiaries own 100% of the networks, facilities, licenses and properties used in its business. These include inter alia the nationwide CDMA and GSM wireless networks, the national and intra-city fibre optic networks, the FLAG and FALCON global submarine cable systems, the Reliance World retail chain, the internet data centres, contact centres, network operating centres, and other facilities used in these businesses.

The entire shareholdings of the Promoter Group in certain affiliates will stand exchanged for equity shares of RCom, thereby providing a simple and transparent ownership structure, and completely aligning the interests of the Promoter Group with over 2 million shareholders of the Company.

The market capitalisation of RCom increases to Rs 62,300 crore (US$ 13.4 billion) – among the top 10 companies in India.

RCom is part of the benchmark Sensex, Nifty and MSCI indices, widely tracked by domestic and international investors.

Background to the corporate reorganisation

Under the ownership structure resulting from the de-merger of Reliance Industries Limited (“RIL”), Reliance Communications Limited (“RCom) did not own a majority stake in any of its principal operating companies or other affiliates.

Following the de-merger, the ownership by RCom of its principal operating companies was as follows:

- 45.34% of Reliance Infocomm Limited (“RIC”), which in turn held 100.00% of FLAG Telecom Limited (“FLAG”);

- 45.00% of Reliance Communications Infrastructure Limited (“RCIL”); and,

- 35.60% of Reliance Telecom Limited (“RTL”).

The balance of the equity shareholdings in RIC, RCIL, and RTL were owned entirely by the Promoters of RCom. This legacy structure had significant drawbacks with regard to resource mobilization, transparency, and valuations.

Anil Ambani-controlled Reliance Communications Ltd (RCL) is planning to increase the number of seats at its Chennai call centre to 4,000 in two phases from the existing 300.

The new facility is likely to come up near the existing call centre at Padi and will cater to the requirements of the group companies.

When contacted, a RCL spokesman said that to cater to the growing customer base of the Anil Dhirubai Ambani Group (ADAG), the reach and the interfaces were continuously enhanced.

He, however, declined to divulge the investment outlay for the proposed enhancement.

Industry estimates are that it takes between Rs. 150 crore and Rs. 175 crore to set up a brownfield expansion of this size. RCL already has a similar size call centre at its headquarters in Navi Mumbai.

Sources said RCL planned to make the Chennai call centre its hub for the four southern States.

The company's subscriber base stood at around seven million, out of which Tamil Nadu and the Chennai circle account for two million.

The group was also planning to increase its network coverage from the existing 650 odd towns to over 1,000 by November 2007.

The planned expansion of the call centre facility is in tune with the expansion being planned by ADAG across various business segments like general insurance and life insurance.

Reliance Capital, a group company, is also planning to launch retail stock-broking and consumer finance businesses.

It is entering the entertainment business in a big way. RCL has projected a cal l centre seat capacity requirement of 10,000, once it hits a 100-million customer base by 2008.