Reliance Offers Free Shares, Cheap Phone at Shareholder Meet

(Bloomberg) -- Reliance Industries Ltd., India’s most valuable company, will give investors one free share for each held for the first time in eight years.

“This will be the largest bonus issue by any company in India so far,” Chairman Mukesh Ambani told shareholders Friday, adding to an earlier announcement on offering an “effectively zero price” feature phone to boost the company’s telecommunications business. “Bonus shares reflect my confidence in the company.”

Shares of the company controlled by billionaire Ambani, India’s richest man, closed 3.7 percent higher at 1,585 rupees in Mumbai, its highest in more than nine years. Reliance shares have gained 47 percent this year, compared with a 20 percent rise in the benchmark S&P BSE Sensex.

“Reliance’s shareholders stuck with the company despite the stock under-performing for almost seven to eight years. The stock has now been outperforming and Reliance has thought it apt to reward those shareholders,” said P. Phani Sekhar, a fund manager at Karvy Capital Ltd. “There is a lot of enthusiasm about Reliance’s new businesses, such as retail and telecom, which is driving the stock rally.”

The Indian tycoon who muscled his way into the country’s mobile phone industry by initially offering free telecom services took another swing at rivals Friday, offering cheap phones. Shares of competitors, including Idea Cellular Ltd. and Bharti Airtel Ltd. plunged.

The wireless unit of billionaire Ambani’s retail-to-refining conglomerate will sell a data-enabled feature phone at a refundable one-time fee of 1,500 rupees ($23) starting August, Ambani told shareholders in Mumbai on Friday. Reliance Jio Infocomm Ltd.’s handset, or JioPhone, will come with tariff plans as low as 23 rupees for two days and 153 rupees monthly, Ambani said.

Reliance has invested 2 trillion rupees over the past five years to roll out its digital services. The telecom operations have stoked a tariff war in the country across data and voice segments, forcing rivals to cut prices. It has also invested more than 1.3 trillion rupees in its energy and petrochemicals businesses.

“All of these investments will start generating operating revenues in the coming months,” Ambani said. “These investments have further strengthened our cost positions, enhanced our scale and competitiveness and created new lines of business.”