India's biggest corporate eyes e-business

Reliance plans to connect 115 cities by optic fibre

By Sanjeev Srivastava in Bombay

India's biggest private sector company - Reliance Industries - has firmed up plans to enter the new economy area of information technology and communications.

It will soon set up Reliance Infocom, a company which will build a state of the art, world class internet infrastructure in India.

Company chairman Dhirubhai Ambani told an annual meeting of the shareholders in Bombay that Reliance Infocom would lay a countrywide fibre-optic backbone connecting the top 115 Indian cities.

Reliance is talking with Lucent, Sun Microsystems

These cities account for more than 50% of the country's GDP.

Mr Ambani said discussions have already been initiated with global internet majors like Lucent, Sun Microsystems, Cisco and Intel for alliances and strategic partnerships.

"All investments should be in place within the next two years," he said.

Project cost

Precise costs can be worked out only after the length of the cable to be laid is finalised, but industry estimates put the investment required at several billion rupees.

Mr Ambani said the proposed broadband network and internet data centres would deliver advanced applications and solutions, including e-commerce, media casting and web hosting.

Reliance also plans to expand aggressively in the telecom sector.

Cellular operations

Reliance Telecom already provides services in 36 cities with a subscriber base of 70,000.

The company plans to expand its cellular service coverage to over 90 cities and double its subscriber base within one year.

Companies like Infosys, Zee already have a lead in infotech sector

Reliance Industries' multi-billion dollar broadband foray is not entirely unexpected.

The company has more than 5m shareholders and has an enviable track record in the Indian private sector for creating wealth for its shareholders.

Reliance's share-price has risen by nearly 90% in the past year.

Of late, however, there was a feeling that the company was losing out in terms of rewarding its shareholders to software and media companies like Infosys, Wipro and Zee Telefilms.

Moving with times

It was also felt that if Reliance Industries was to retain its position of being the number one private sector company in India it could not completely remain out of the new economy.

According to market analysts, the Reliance management's move into the high technology sector is made with two key objectives in mind.

It gives the company an entry into a sector where future growth and earnings rate is going to be the fastest.

But equally important from the management perspective is the fact that the move gives the message that Reliance is moving with the times.