Mumbai, June 11 (IANS) Barely an hour after Infotel Broadband, a company promoted by the Nahatas, was named a pan-India winner of broadband airwaves auction, Reliance Industries Friday said it will acquire majority stake in the company for over $1 billion.
The surprise development came a fortnight after the Ambani brothers, Mukesh and Anil, entered into an ‘environment of harmony’ agreement that virtually allowed their groups to enter any business they desired, ending a previous non-compete agreement.
‘Reliance Industries will invest about Rs.4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel Broadband that has emerged as a successful bidder in the auction of broadband spectrum,’ the $44.6 billion group said.
‘Post this investment, Reliance Industries will own 95-percent of the equity and Infotel Broadband will be its subsidiary,’ the company said in the regulatory statement with the Bombay Stock Exchange (BSE).
Infotel Broadband won the licenses in all the 22 circles in the auction. The company has been promoted by Anant Nahata, son of Mahendra Nahata of Himachal Futuristic that makes optical cables and fibres. Infotel will pay a pan-India licence fee of Rs.12,847.77 crore.
Himachal Futuristic, which had won several mobile phone service circles when it was opened up for further private players in mid-1990s, said Thursday it does not own any stake in Infotel.
Yet, the company’s scrip shot up on the BSE to touch the upper cirucuit filter at Rs.11.39, up 4.98 percent from its previous close. In contrast, the shares of Reliance Industries ended 3.03 percent higher at Rs.1,046.25.
Reliance said it saw broadband opportunity as a new frontier of knowledge economy in which it could take a leadership position and provide India with a platform to be among countries providing world class communications network and services.
‘We believe this will pole vault India’s economy into the digital world at an accelerated pace while creating next-generation tools that will enhance productivity and create world-class consumer experiences,’ Mukesh Ambani said.
The company said it will forge ties with global firms to develop infrastructure for the roll out of services.
‘Reliance Industries will comply with the non-compete and trademark agreements entered into at the time of corporate de-merger and subsequent modifications made last month,’ the company added.