RCL lines up $2.5 bn capex for 2007-08

Reliance Communications has earmarked $2.5 billion (around Rs 11,000 crore) for expansion of its domestic business in the next financial year. The company's capital expenditure for FY07 was around Rs 7,700 crore.

The company's debt to equity ratio in 200-07 reduced to 0.07:1. This means the company can borrow up to $5 billion (Rs 20,000 crore), Reliance Communications chairman Anil Ambani said today.

"There are multiple growth opportunities and we are embarking on a profitable integrated business model. We will follow the most prudent business financial norms while investing in the country," he said, adding their objective was profitable growth and unlocking sustainable value for shareholders.

The $2.5 billion capex excludes the earlier announced $1.5 billion investment in Flag Telecom, the company's undersea cable operator.

The capex includes setting up of 20,000 base transceiver stations or towers (a passive infrastructure required for telecom growth) and further enhancing of nation-wide capacity of both GSM and CDMA operations.

The setting up of 20,000 towers will help the company expand its coverage to over 4,000 towns and villages next year from the present 2,200. "This will result in Reliance Communications having the largest mobile connectivity in the country," said Reliance Communication chairman.

Moreover, the sum will also be used for increasing GSM connectivity from the present 8 circles. It will be used for its broadband initiatives and launchIng of IPTV and DTH services. IPTV and DTH services will be launched by the third quarter of the next financial year.

On the Hutch-Essar issue, Ambani said Reliance Communications was keeping a close watch on the situation and the due diligence process was on. The company intends to place its bid in the next few weeks, he added.