Reliance Industries is in the process of obtaining more financial funding to expand their telecommunications branch, Infotel Broadband Services. The borrowing of the reported $1.5 billion is for the purchasing of necessary equipment and the expense of bringing this venture to fruition.
Reliance Industries was able to gather $1.5 billion in funding earlier this year using two separate tranches.
The start up of the telecom services offered by Reliance Industries was started previously in the acquisition of Infotel Broadband. Infotel Broadband was awarded the licenses to provide the broadband service in the pan-India region. The pledge from Reliance Industries of spending $4 billion to get the telecom services up and running demonstrated through the acquisition of Infotel Broadband. Infotel Broadband was previously part of Himachal Futuristic Group whose corporate headquarters are located in New Dehli India.
Citibank has underwritten a very large portion or the funding for the acquisition. The process of price discovery is still in the process but the opinion of many is when the process is completed several banks close to becoming part of the funding will act quickly to participate.
Reliance Industries is led by billionaire Mukesh Ambani. Mukesh Ambani brought Reliance Industries into the acquistion of 95% of Infotel Broadband for 4800 crore. Mukesh Ambani paid 12,848 crore for 20 MHz if spectrum throughout the 22 serviceable areas of India. The total of 17,600 crore is valued at $4 billion US. The company used a diverse means of financing to make the acquisition possible. The company was able to do this by using a compilation of equity and short term loans. Since the acquisition has been made, the company has made the change of the short term bridge loans to longer termed debt. The company has never made the details of the initial financing available to the public, but is thought the company’s reserves were used to obtain the equity needed.
A government auction is the means Reliance Industries obtained the licenses that make them the sole company that is capable of providing all of India with high-speed data. The high-speed data that is or will be offered is third generation (3G), and broadband wireless acess.
Prior to the purchase by Reliance Industries, led by billionaire Mukesh Ambani, Infotel of Broadband Services had raised capital of $1 billion. The Royal Bank of Scotland was the leader in the consortium in securing the funding.
The expectations were for Infotel Broadband Services to deliver within a time frame of about 8 months WiMax or a newer, unproven service known as LTE. The acquisition, led by Mukesh Ambani has changed the telecommunication landscape in India.