Reliance Globalcom launched

Plans $2 bn upgradation, mulls initial float.

Reliance Communications (RCom) has consolidated its global businesses into a newly-formed subsidiary, Reliance Globalcom, and will invest over $2 billion by the financial year 2009 for upgradation and expansion.

The company, which will be headquartered in London, would also go in for an initial public offering in the "near future", Punit Garg, president of Reliance Globalcom said today.

Reliance Globalcom will become the holding company for the global operations of Reliance Communications (which offers voice services like Reliance India Call, Reliance Global Call, Reliance Netcall and Reliance Passport), the submarine cable subsidiary Flag Telecom and the recently acquired US-based Yipes Enterprise Service (an Ethernet technology major).

"Reliance Globalcom will bring a diverse portfolio of global communications business services like the global voice, managed network, carrier Ethernet and fibre capacity into a single group," Garg said.

"Apart from this enabling us to reach the customer faster, it will also help us increase our global footprint and emerge as one of the top telecom companies in the world."

About $2 billion will be spent by 2009 for managed services network, infrastructure upgradation and capacity expansion of Flag. "Of this around $1.5 billion has already been committed and the remaining 0.5 billion would be infused next year," Garg said.

With the consolidation of its global business, the company will have an annualised start-up revenue of $1.32 billion and EBIDTA of $334 million, he said.

The company will target the global telecom arena that has an annual addressable revenue potential of $285 billion.

RCom has also changed the name of its subsidiary Yipes Enterprise Services to Reliance Globalcom Services and that of Flag Telecom to Reliance Flag. Both the companies will function as subsidiaries of Reliance Globalcom.

Reliance Globalcom will have a presence in over 50 countries, including the top 20 financial centres in the world, among them New York, London, Tokyo, Paris, Chicago, Toronto and Frankfurt.

Last week, another telecom major Videsh Sanchar Nigam Ltd (VSNL) re-christened the company as Tata Communications and integrated VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit and Cipris brands under the new name.