An equity research report authored by Kotak Institutional Equities has said that Reliance Industries Limited (RIL) may have to acquire a single or multiple telecom operators in the voice segment, to consolidate its presence in the telecom space. Currently, it is equipped to enter the broadband wireless space only.
The report added that the acquisition route may not add much value, unless RIL acquires Reliance Communications (RCOM). It said that the telecom space was quite competitive, regulations were becoming increasingly hostile and RCOM?s existing brand presence could confuse potential subscribers, unless RIL acquires RCOM.
Clarifying its stance, Kotak Institutional Equities said it did not know if RIL had any interest in acquiring RCOM or whether RCOM’s major shareholder had any interest in selling to RIL.
In 2010, RIL acquired 95 per cent stake in Infotel Broadband Services, which obtained pan-India broadband wireless access (BWA) spectrum. RIL has invested over Rs 42 billion in Infotel.
With regard to RIL’s re-entry into the telecom space via their BWA licence, the Kotak report said that RIL would have to contend with well-entrenched players and a small (but growing data market.
