There is a new twist in the love-hate story of India's most famous brothers — Mukesh and Anil Ambani. Even though the brothers aren't bitter rivals anymore, they are again locked in an indirect fight tilted heavily against the younger brother, Anil.
Elder brother Mukesh's company Reliance Jio, which has shaken the telecom market with its aggressive entry last year, has ended up giving a big blow to Anil's company, Reliance Communications.
Hit by Reliance Jio’s free offers and disruptive pricing in the telecom industry, Reliance Communications posted a few days ago its first year loss since its inception of Rs 1,285 crore for fiscal gone by, compared to a net profit of Rs 660 crore when compared on a like-to-like basis. It posted a consolidated net loss of Rs 966 crore for the fiscal ended fourth quarter compared to a net profit of Rs 90 crore in the same period last year.
The company blamed the crisis in the industry, hyper competition, free offers and disruptive pricing. Behind all these factors is elder Ambani's company, Reliance Jio.
Last year, it seemed the brothers would soon band. A decade after the Ambani brothers split, Anil announced that his telecom company had “virtually” merged with Mukesh's Reliance Jio.
“As far as our 100 million customers are concerned, as far as our 1 million retailers are concerned, as far as our employees are concerned, and as far as our vendors and partners are concerned, there has already been a virtual merger of the two organisations (RCom and Jio),” Ambani had told shareholder ..
There are two committed brothers—Mukesh Ambani and Anil Ambani—both working relentlessly to fulfil the dream of Dhirubhai Ambani,” Anil had said.
But the elder brother was not so forthcoming. In an interview to ET a few weeks ago, Mukesh had said he was “happy” that the two brothers had overcome all their past issues at the family level, but added that their businesses were separate. The elder brother had said Jio would work with all the players in the industry, including RCom, number of mutually beneficial areas.
A few days ago, when Reliance Communication declared its result, an altogether different picture emerged: Bada bhai's ambitious dream to capture the telecom market was giving nightmares to the chhota bhai.
Reliance Communication is in a bigger trouble: It has defaulted on its loan servicing obligations with more than 10 local banks, some of whom have categorised the exposure as "special mention account" in their asset books.
Now, its survival depends on two moves: selling half of its wireless telecoms business to Aircel and 51 per cent of its towers unit to Canada's Brookfield.
According to Reuters, these deals will reduce net debt by more than half to about $3 billion but will not close until a dispute relating to Aircel's ultimate backer, Malaysian tycoon Ananda Krishnan, is resolved. Lenders must consent too. RCom also plans to sell properties, but it is unclear if the group's remaining subsea cable and enterprise business can comfortably service the leftover debt.
Elder brother Mukesh's company Reliance Jio, which has shaken the telecom market with its aggressive entry last year, has ended up giving a big blow to Anil's company, Reliance Communications.
Hit by Reliance Jio’s free offers and disruptive pricing in the telecom industry, Reliance Communications posted a few days ago its first year loss since its inception of Rs 1,285 crore for fiscal gone by, compared to a net profit of Rs 660 crore when compared on a like-to-like basis. It posted a consolidated net loss of Rs 966 crore for the fiscal ended fourth quarter compared to a net profit of Rs 90 crore in the same period last year.
The company blamed the crisis in the industry, hyper competition, free offers and disruptive pricing. Behind all these factors is elder Ambani's company, Reliance Jio.
Last year, it seemed the brothers would soon band. A decade after the Ambani brothers split, Anil announced that his telecom company had “virtually” merged with Mukesh's Reliance Jio.
“As far as our 100 million customers are concerned, as far as our 1 million retailers are concerned, as far as our employees are concerned, and as far as our vendors and partners are concerned, there has already been a virtual merger of the two organisations (RCom and Jio),” Ambani had told shareholder ..
But the elder brother was not so forthcoming. In an interview to ET a few weeks ago, Mukesh had said he was “happy” that the two brothers had overcome all their past issues at the family level, but added that their businesses were separate. The elder brother had said Jio would work with all the players in the industry, including RCom, number of mutually beneficial areas.
A few days ago, when Reliance Communication declared its result, an altogether different picture emerged: Bada bhai's ambitious dream to capture the telecom market was giving nightmares to the chhota bhai.
Reliance Communication is in a bigger trouble: It has defaulted on its loan servicing obligations with more than 10 local banks, some of whom have categorised the exposure as "special mention account" in their asset books.
Now, its survival depends on two moves: selling half of its wireless telecoms business to Aircel and 51 per cent of its towers unit to Canada's Brookfield.
According to Reuters, these deals will reduce net debt by more than half to about $3 billion but will not close until a dispute relating to Aircel's ultimate backer, Malaysian tycoon Ananda Krishnan, is resolved. Lenders must consent too. RCom also plans to sell properties, but it is unclear if the group's remaining subsea cable and enterprise business can comfortably service the leftover debt.
Comments
Post a Comment