Ambanis Reunite on Wireless Carriers to Help Pay for 4G Coverage
September 27, 2016 — 5:13 PM IST, Updated on September 28, 2016 — 8:01 AM IST
Anil says Reliance Communications, Jio in 'virtual merger'
· Reliance Communications to cut debt 75% within a year: Anil
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Billionaire Anil Ambani said his telecommunications company had achieved a "virtual merger" with the new operator started by his older brother Mukesh after a family feud split Reliance Industries Ltd. a decade ago.
Reliance Communications Ltd. will share spectrum, networks and towers with Mukesh's Reliance Jio Infocomm Ltd., Anil Ambani, Reliance group chairman, told shareholders in Mumbai Tuesday. Investments to introduce fourth-generation services across India will be funded by Jio, the younger Ambani said.
India, the world's second-largest mobile market by subscribers, is ripe for consolidation as competition among a dozen carriers has driven down phone rates. Mukesh's Jio debuted this month offering free calls in a challenge to market leader Bharti Airtel Ltd.
For an analytical look at Reliance Communications' financing costs, click here.
Reliance Communications has struggled amid intensifying competition and this month announced a combination with smaller carrier Aircel Ltd. The deal comes as Reliance Communication shares have slumped 46 percent this year, the worst performance on the broader S&P BSE 100 Index.
A spokesman for Mukesh Ambani's Reliance Industries didn't answer calls or respond to a text message seeking comment Tuesday.
With the merger with Aircel, and partnership with Jio, Reliance Communications has enough spectrum and won't depend on the auction that begins this week, Anil Ambani told shareholders Tuesday. Ambani also said that his company would reduce its debt by 75 percent within a year.
Reliance Communications had more than 440 billion rupees ($6.6 billion) of debt as of March 31, 2016, about 10 percent more than a year earlier, according to data compiled by Bloomberg.
Reliance Communications shares rose 1.3 percent to 48.05 rupees at the close in Mumbai.
In 2005, three years after the death of Reliance founder Dhirubhai Ambani, the Ambani brothers agreed to split their father's empire with Mukesh retaining control of the flagship, running oil, gas and chemicals, while Anil took the power, mobile-phone and financial-services businesses.
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