RCom forms JV in Sri Lanka

Anil Ambani’s Reliance Communications (RCom) is getting into the Sri Lankan telecom market. To being with, it is learnt to have formed a JV with a local firm which will launch GSM mobile services in Sri Lanka by this year and subsequently other telecom services.

RCom is learnt to have decided to invest Rs 1200 crore in the JV in next 3 three years to set up a next generation integrated telecom network.

Sources said a special purposed vehicle of RCom has formed a JV with Sri Lankan firm Electroteks for the proposed telecom foray. RCom owns 74% equity in the JV, the maximum permissible shareholding by a foreign company in the Sri Lankan telecom industry.

Electroteks, controlled by its founder CEO BAC Abeywardana will control the remaining equity in the JV. An RCom spokesperson declined to comment.

Sources said the JV—Reliance Mobile Lanka—has received start-up GSM spectrum and the access code from the Sri Lankan authorities. RCom has also invited expression of interest from global vendors for the GSM lines in Sri Lanka.

The new venture targets a set up a network with a capacity in range of 5 million lines. Sri Lanka has population of 20 million. Nearly 40% of the population subscribe to telecom services.

The Sri Lankan foray follows a similar move by RCom in Uganda where it plans to introduce services by this year December end.

The investment in Uganda is estimated to be in range of Rs 1,600 crore. According to initial estimates, Reliance Mobile Lanka has set a target of generating revenue of Rs 2,000 crore after two years, EBIDTA margins, on completion of the integrated network rollout, are expected to be over 40%.

The Sri Lankan foray is a part of RCom’s strategy to expand its global optic network, enhance service offerings and start fully integrated telecom operations in some emerging markets with a total investment of $3 billion. Indian operator Airtel holds a licence to offer mobile services in Lanka.

Sources said RCom will follow a strategy similar to that in India of having an independent telecom infrastructure arm to develop the passive infrastructure like telecom towers and national long distance fibre of around 5,000 km.
They added that RCom may launch its “One Nation One Account” in Sri Lanka.

Under this plan, the customer is enabled to access all service categories, subject to hardware compatibility. It means, a customer using any service such as mobile phone, landline, Net, Wi-Max, DTH can log on to central server and access any service using his account.