* Plans investment of $11.7 bln in telecoms business
* Raises three-year investment target to 1.8 trillion rupees
* Ambani says market-based prices key to develop energy
(Adds Reliance forecast for retail business, new board member)
By Aman Shah
MUMBAI, June 18 India's Reliance Industries Ltd
will start offering fourth-generation (4G)
telecommunications services next year, its chairman and India's
richest man, Mukesh Ambani, said on Wednesday, a move that will
intensify competition in an already crowded market.
Reliance, India's third-most valuable company, gets most of
its revenue from its sprawling energy empire. It has expanded
into new businesses like retail, telecommunications and media in
recent years as growth in its core energy business slows.
Reliance made a return to telecoms in 2010 by acquiring the
only company that had won nationwide 4G airwaves in a government
auction, but has yet to start services as it builds the business
on an unproven and still-developing technology.
On Wednesday, Ambani told shareholders that Reliance was
planning an investment of 700 billion rupees ($11.7 billion) in
the telecoms business, Reliance Jio, and would launch services
in phases across India in 2015.
Reliance's entry into the telecoms sector poses a threat to
rivals like Bharti Airtel Ltd, Vodafone Group Plc
and Idea Cellular Ltd, which in recent
quarters managed to raise voice call prices after a years-long
"Once (Reliance) Jio comes, voice charges will get disrupted
because they typically bring in cheaper rates," said Naveen
Kulkarni, a telecoms analyst at PhillipCapital.
Kulkarni, however, said Reliance's planned launch in 2015
gives "some cushion" to the existing telecom carriers. Some in
the industry had expected Reliance to start services this year.
Reliance aims to offer high-speed data as well as voice
services and added more airwaves from an auction this year.
"The objective is to ensure that everything that we offer is
future-proof and world-class," Ambani told Reliance's annual
shareholder meeting. "Limited field trials with our initial set
of services for the broad band services are already underway."
Cash-rich Reliance plans to invest more than 1.8 trillion
rupees ($30 billion) over a three-year period that ends in March
2016 across all its businesses, Ambani said. Last year, the
company had announced plans to invest 1.5 trillion rupees over
Reliance expects to double its retail business's sales every
three to four years, said Ambani, whose wife Nita won
shareholder approval on Wednesday to join the company's board.
The unit, the largest retailer by revenue in India's $500
billion retail sector, posted its first annual profit since its
beginning in 2006 in the fiscal year ending March 31.
ENERGY INCOME FALLING
Reliance's move into telecoms are meant to cushion a decline
in oil and gas revenue that has been hit by the falling output
from its key gas block off India's east coast.
Reliance and its partners in the KG-D6 gas block - BP Plc
and Niko Resources - are also locked in a
dispute with the federal government over the implementation of
higher gas prices.
Ambani said on Wednesday timely regulatory approvals and
"market-based gas prices" were key to developing the resources.
The government in June last year approved a formula, linking
prices of locally produced gas with global benchmarks, that
could have nearly doubled gas prices from the current $4.20 per
mmBtu from April 1.
That price increase was ordered to be deferred by the
election regulator ahead of a general election and the new
government that took power last month has yet to decide on the
Reliance shares extended their fall after the shareholders'
meeting and ended down 2.1 percent. Some traders said investors
were disappointed by the absence of a plan to resolve the gas
price dispute in Ambani's speech.
(Additional reporting by Nivedita Bhattacharjee and Abhishek
Vishnoi; Writing by Devidutta Tripathy; Editing by Matt Driskill
and Louise Heavens)