Indian tycoon ordered to pay or go to jail
Anil Ambani ‘refused to pay telecom giant Ericsson $77 million’
NEW DELHI: India’s top court told billionaire tycoon Anil Ambani yesterday he must pay his debts to Sweden’s Ericsson or go to jail, the latest twist in a saga that has brought his telecom company to its knees. Ambani’s Reliance Communications is some $4 billion in debt after a brutal telecom price war with his brother Mukesh-India’s richest man. Judges found Anil Ambani, 59, had refused to pay telecom giant Ericsson 5.5 billion rupees ($77 million) as previously ordered by the Supreme Court.
They ruled the billionaire will be jailed for three months if 4.5 billion rupees are not stumped up within four weeks.
Ambani’s firm said it will comply with the ruling and pay the debt. Some 1.0 billion rupees have already been deposited with the court, which said the sum will be handed to Ericsson.
But the ruling dealt a new blow to Reliance Communications shares which lost another 3.65 percent Wednesday on the Mumbai stock exchange. The shares have now fallen 86 percent in the past three years-including a drop by more than a third after it filed for insolvency.
That move was started after Reliance Communications failed to sell assets to pay back lenders.
The dispute started when Ericsson sought to recoup 16 billion rupees from Reliance Communications. They reached a settlement last May, but the Indian company failed to meet payment deadlines.
Ambani had hoped to avoid insolvency proceedings by offloading his company’s telecom tower and spectrum business to his brother’s Reliance Jio for $2.4 billion. But the deal has hit regulatory hurdles and opposition from creditors. Reliance Communications faces liquidation if it is unable to pay back its debts by November.
The Ambani brothers engaged in a bitter feud for control of Reliance Industries after their rags-to-riches father Dhirubhai Ambani died in 2002 without a will.
The pair ended up splitting the Reliance group, which was India’s most valuable listed company. RCom shares plunge in latest twist between battling tycoon brothers
The Anil Ambani-led mobile carrier is reeling under debts of around $4 billion after a battle with Reliance Jio-led by Ambani’s older brother and India’s richest man Mukesh Ambani.
The fight for supremacy in India’s hugely competitive telecoms market is the latest twist in a long-running saga between the tycoon brothers which has gripped India’s business community.
Reliance Communications said in a statement last week that it had decided to start insolvency proceedings after failing to sell assets to pay back lenders. The company had hoped to offload its telecom tower and spectrum business to Reliance Jio for $2.4 billion but the deal has hit regulatory hurdles and opposition from creditors. It faces liquidation if it is unable to pay back its debts, with the help of the national bankruptcy court, in 270 days.
Reliance Communications was once India’s second-biggest wireless carrier, but began a downward spiral when its rival shook up the telecoms market in 2016 by offering free voice calls and vastly cheaper data plans.
The new 4G Jio network sent competitors scurrying to match the costly investment or deciding to get out of India altogether. The Ambani brothers engaged in a bitter feud for control of Reliance Industries after their rags-to-riches father Dhirubhai Ambani died in 2002 without a will. The pair ended up splitting the Reliance group that was India’s most valuable listed company.
After a protracted court case that saw their mother, Kokilaben, act as peacemaker, the brothers agreed to bury the hatchet and tear up a non-competition agreement that prevented them from entering the same sectors. In 2011, Mukesh and Anil came together to dedicate a memorial to their father, and their mother declared the enmity over, telling reporters: “There is love between the brothers.” — AFP