Reliance Communications to invest $500 million in Uganda

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Punit Garg, Reliance Communications' Global Business president, said, "Uganda telecom market is similar to what India was 8 years back. Our expertise in managing among world's largest integrated telecom network, and deep understanding of diverse consumer segments makes us confident to achieve a significant position to add further value for our 2 million shareholders."

Uganda has a population of about 30 million, and had about 3.016 million mobile subscribers by March-end 2007, according to Uganda Communications Commission. Reliance Communications said that the 10 percent penetration provides ample scope of expansion.

The Reliance Communications Group has decided to invest in setting-up a first-class, fully-IP enabled integrated telecom network in Uganda to arrest the major growth prospective in this rising African market.

Reliance Communications plans to join the African continent with the rest of the world by laying a submarine cable system through its division Reliance FLAG. It plans to invest $1.5 billion (Rs.6,000 crore) in establishing a 1.15 lakh km fully IP-enabled optic network to extend to two thirds of the world population.

Through the target firm's licenses, the company would provide mobile, fixed line, Internet, national and international long distance services as well as Wimax and WiFi services in Uganda. The operator stated that it has received spectrum and would launch mobile services in Uganda by 2008-end.

This is the third global acquisition for the company after FLAG in 2003 and Yipes in 2007, and first international acquisition as far as services are concerned. The current acquisition agreement's total deal size is higher than the $211 million (Rs. 950 crore) for FLAG and $300 million (Rs. 1,200 crore) for Yipes.

Reliance has recently been allowed to offer GSM technology based mobile services in India along with its existing CDMA operations throughout the country.

Reliance Communications has ambitious global expansion plans and is concentrating on opportunities in emerging Asian and African markets.

The Uganda acquisition came a day after Reliance Communications announced the formation of Reliance Globalcom, the umbrella brand for all its international businesses.

Reliance Communications' Chairman Anil Ambani said ,"The Company would be investing over $6 billion in CAPEX (Capital Expenditure) next fiscal." There are indications that around 35 percent of this amount will be directed towards expanding the global business. As for the rest, around $200 million will be for expanding the footprint of Ethernet services and $300 million will go towards data centers.

Presently, Reliance Communications, India's second-biggest mobile operator, is available in 340 towns within its eight-circle footprint through its GSM cellular services. Its CDMA services are available in 19 states and cover state wise about 65 percent of the country.