Mukesh comes to brother’s rescue with purchase of spectrum, towers
MUMBAI: Shares of Anil Ambani’s struggling wireless carrier extended this month’s heady runup after his billionaire brother Mukesh agreed to buy the company’s spectrum, mobile-phone towers and fibre assets, providing a cash infusion that will be used to help stave off insolvency.
The stock surged 21 per cent to 37.4 rupees (RM2.37) at 10am, here, having more than doubled in the past week alone amid speculation that Anil had secured agreements to sell enough assets to cut debt. Trading volume was seven times the 20-day mean for this time of day.
Mukesh’s own wireless venture, Reliance Jio Infocomm, emerged the highest bidder for the assets and the sale was expected be closed by March, said Reliance Communications Ltd (RCom) and Jio said in separate statements on Thursday, which coincided with the group founder Dhirubhai Ambani’s birthday.
RCom said earlier this week it expects to fetch about 250 billion rupees, all of which would be used pay down loans.
The carrier had total debt of 450 billion rupees as of end-October, and it aimed to pare that to 60 billion rupees, said Anil on Tuesday.
The bailout marks the return of the telecom company back to the fold of Reliance Industries Ltd, which entered telecom in 2002.
A feud between the two brothers in 2005 led to the split of Reliance Industries when Mukesh kept the oil and gas business and Anil walked away with telecom and power.
The brothers agreed to a rapprochement after a nudge from India’s Supreme Court couple of years later when they sought its intervention in a deal for supplies of natural gas from the nation’s largest gas field.
They called truce and became competitors in the telecom business after Mukesh made a splashy entrance last year. It was then that RCom agreed to share its spectrum, networks and towers with Reliance Jio, in a move that Anil referred as a “virtual merger”. Bloomberg