RCom ups annual investment to Rs 4,000 cr, stops 2G in 5 areas

New Delhi: Telecom operator Reliance Communications has enhanced its annual investment to Rs 4,000 crore with focus on 3G services while it ended 2G service in five circles including Bihar, West Bengal and Assam.

"I am happy to share we are increasing financial guidance for capex this year from Rs 3,000 crore to Rs 4,000 crore.

Much part of it this capex will be invested in financing our 3G footprint and strengthening our footprint in MP-CG (Madhya Pradesh, Chhattisgarh) where we acquired 900 Mhz spectrum,"

Reliance Communications chief executive for Consumer Business Gurdeep Singh told analysts today.

He said part of the investment will go in upgrading core network for 4G service, which the company may launch in couple of months from now.

Similar level of investment is expected to be made in coming years as the company will continue to focus on 3G and 4G services.

He said the company is seeing uptake of 3G service and device penetration in its market has reached to level where the company needs to invest for profitable growth.

RCom has also closed servicing 2G customers in five circles -- West Bengal, Bihar, Assam, Odisha and Northeast areas as it failed to win back 900 Mhz. RCom lost 8.5 million 2G customers as result of ending the service in these areas.

The impact was visible on company's result in third quarter ended December 31. RCom had reported a 15 percent decline in consolidated net profit to Rs 171 crore for the period compared with net profit of Rs 201 crore a year ago.

Total income also declined by 2.9 percent to Rs 5,277 crore compared with Rs 5,435 crore last fiscal.

Singh said the roaming agreement with Vodafone is for 3G services and it provides network back to customer where they find 3G coverage gap.

"This (pact with Vodafone) is not a 2G ICR. It is 2G ICR for fall back to our 3G customers should they hit a black patch in the coverage within a circle much like anybody else.

This is not a ICR that lets us acquire 2G subscribers from the network. We are a pure play 3G operator in these five circles," Singh said.

He said the company has added 386 sites for 3G across 186 towns in the circles where it closed 2G service.

Singh said Rs 5,383.84 crore paid by the company for spectrum liberalisation to government in 16 telecom circles was funded by proceed it received from Reliance Jio as well as from internal accruals.

Both the companies have signed a pact under which, RCom will trade CDMA grade spectrum in 800 MHz band in nine service areas where Jio doesn't have the radiowaves. In 17 circles, the two companies will share spectrum.

RCom has approached courts for approval for merging telecom operator Sistema Shyam Teleservices, which operates under MTS brand merger, and expects to close the deal in time.

Talking about discussion with Aircel, Singh said both companies are still working out on area of convergence of both organisation.

Singh said discussion with Tillman Global Holdings LLC and TPG Asia are in advance stage for sale of its mobile tower.

The deal was to be closed by January 15 but has been extended till month-end.