Indian billionaire Mukesh Ambani is planning to go for a rights issue to raise $2.2 billion to partly finance the forthcoming Reliance Jio wireless broadband venture. Jio is expected to be launched around April this year and Reliance Industries has ploughed in at least $16bn.
The launch is also long-delayed - its introduction was first mooted in 2012 - while details of the business, which will provide high-speed broadband connections to India’s growing population of smartphone users, have been shrouded in secrecy. Jio’s arrival marks Mukesh's re-entry into the country’s telecoms market after a hiatus of about a decade.
To meet some of costs of its new venture, Reliance Industries said in a stock exchange filing that it would issue 15 billion shares at Rs10 each to existing shareholders. The issue is slightly smaller than a £1.67 billion offering from State Bank of India in 2008, the country’s largest.
Meanwhile, Reliance also released third-quarter results that exceeded analysts’ expectations, with net profits up 39 per cent year on year. The increase was driven largely by an improvement in margins at Reliance’s main oil refining division, which accounts for about two-thirds of group revenue.
However, the company’s share issue came amid a flurry of developments for Jio, as Mukesh’s venture limbers up for a launch that has been a major focus for its founder over recent years, and which is expected to set off a new wave of rivalry in India’s already competitive telecoms sector.
In late December, Reliance staged a star-studded private launch for its new network, attended by the likes of Bollywood star Shah Rukh Khan and musician AR Rahman, along with tens of thousands of employees.
The event was designed to launch Jio among Reliance employees, effectively as an early test for its network before it is made available to ordinary customers in a few months.
Most industry analysts think Mukesh’s launch will kick off a potentially damaging telecoms price war in India, hitting rivals such as India’s Bharti Airtel and UK-based Vodafone, the country’s two largest mobile operators.
