It seems the recent fall witnessed in telecom stocks have not dithered telcos to put a break on their expansion plans. RCom has prepared a massive expansion plan named ‘Edge 2010′ to get a grip in highly competitive telecom market.
The ‘Edge 2010′ plan envies a capex of around Rs. 6,300 crores out of which a major amount will be raised in terms of short-term debt offerings. The capex is divided into its subsidiaries and sister companies and will see a expansion in areas of telecom, DTH, broadband from the group.
The plan will see ADAG investing Rs. 1500 Crores into MacroNet Mercantile Pvt Ltd, to handle the imports of telecom equipments, modems, handsets, DTH set-top boxes. Reliance will also raise Rs. 1,180 crores for building a world-class data centre in Hyderabad and major expansion in data centre operations.
The company is also looking at raising the store count of Reliance World, the company’s retail arm, from the current 240 to almost 300 levels in 155 cities. Reliance BIG TV will also see massive marketing budget along with competitive pricing. They aim to garner close to three million subscribers by this year end.
RCom’s revenues in Sep. ’09 quarter showed a marginal growth at Rs. 5,703 crore Against Rs. 5,645 crore reported in the corresponding quarter. The expansion plan envised through short-term borrowing might put questions on rumours of sale of its U.S based assets as it will not have entailed to such borrowings if it was indeed looking at such sale.
The expansion is very huge in data centre operations and DTH business whereas the ROI in those businesses is going to be negative in initial period. The company’s own expansion in retail format although could prove to be a viable business model as it uses its properties for multiple businesses like mini-gameplex, BIG Flix and other retail forays.
