Mukesh Ambani's next act: Telecom revolution
Nobody expected any hungama this monsoon. So, the folks on the fourth floor of Mumbai's Maker Chambers IV, the headquarters of India's largest company, Reliance Industries (RIL), weren't prepared for the announcement when it came.
As the news flashed on television channels on June 11, employees went into a huddle wondering if it was true. A few got calls from curious friends and relatives. And the euphoria that emerged very soon could be described in only one way: Ab Kar Lo Duniya Mutthi Mein.
Mukesh Ambani had just announced that the Reliance Industries group was returning to the telecombusiness, less than a decade after it shook up the mobile telephony market with its CDMA-based service, a business that went to younger brother Anil Ambani in a fractious family settlement four years ago. This time, Mukesh Ambani's bet is much more intriguing than his first one under Reliance Infocomm. He has bought unlisted firm Infotel Broadband, owned by the Nahatas, for a little over billion. Infotel was the only firm to win a pan-India frequency on the broadband spectrum in an auction a few days before the deal. With this acquisition, Ambani has clearly indicated that he wants to usher in fourth-generation communication technologies (4G) to seed a data-rich services market, even as the entire telecom industry is grappling with the third-generation, or 3G, service roll-outs. Ambani or the handful of his lieutenants haven't spoken a word on what is in their mind, but the enormity of their plans has not been lost on the industry.
First of all, rivals are dumbstruck at the price that he has paid for Infotel to enter a risky and unproven market. "I would have lost my job if I had bid so high for the broadband wireless spectrum Reliance just bought. But my board is still confused if we have missed out on a big opportunity," says the CEO of a rivaltelecom infrastructure company, requesting not to be named. But the big question on everyone's mind is: Can Mukesh Ambani pull off his wireless broadband game plan and if he does, how will it change the face of the telecom industry? Ambani's last foray in telecom and the subsequent changes in technology and market trends throw up ample clues.
Make no mistake about it: Mukesh Ambani's plan will be predicated on a massive scale. In his first brush with mobile telephony in 2002, RIL's chairman and managing director launched a national rollout overnight and promised cheap mobile calls, creating a virtual frenzy in the market. His competitive plans pretty much helped the industry take off with big volumes, albeit into an era of falling user revenues. This time around, Ambani plans to offer to the masses all the ultra high-speed Internet and broadband services that were so far available only on wired or private networks. Reliance projects broadband subscriber number in India to reach 120 million in the next three to four years, growing to 10 times of what it is today.
Just as he then backed a technology (code division multiple access or CDMA) not chosen by the rest of the industry, Ambani is giving shape his latest plan with a technology choice that's an unknown quantity to many rivals. Read more....
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