[ecis2016.org] Billionaire Anil Ambani has announced that the cash-strapped Reliance Communications will be completely exiting the telecom business, to concentrate on real estate in the future
The first priority for Reliance Communications (RCom), which is credited with democratising telecom services through cheaper offers in the early 2000s, is to resolve its over Rs 40,000-crore debt, Anil Ambani told shareholders at the company’s 14th annual general meeting in Mumbai, on September 18, 2018. We have decided that we will not proceed in this sector and many other companies have taken a similar call. This is very much a writing on the wall, the future, he said.
You are reading: RCom to exit telecom fully, to focus on realty: Anil Ambani
“As we have moved out of the mobile sector, we will monetize, at an appropriate stage, our enterprise business. Reliance Realty will be the engine of growth for the future of this company,” Ambani said.
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Pointing out to the 133-acre Dhirubhai Ambani Knowledge City (DAKC) on the outskirts of the financial capital, he said there is huge realty play opportunity that RCom’s erstwhile corporate headquarters possesses and pegged the potential value creation at the site, at Rs 25,000 crores. Reliance Realty is a wholly-owned subsidiary of RCom, which will develop the DAKC in Navi Mumbai, he said, adding that it is already a registered IT and Fintech park. The company already has three million sq ft of built up space, which will be leased out to multi-nationals, Ambani said, adding that he expects revenue accruals through it this year itself.
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RCom owes over Rs 40,000 crores to a group of 38 lenders, including Chinese banks and was resolving the debt through a strategic debt restructuring (SDR) process. Ambani said he is confident of getting a resolution in the next few months and added that other monetisation measures, including the sale of its telecom infrastructure and fibre to Reliance Jio, are at an advanced stage of closure. He said the company is awaiting final approvals for spectrum sharing and trading, from the Department of Telecom.
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Anil Ambani also thanked his elder brother Mukesh Ambani, who is credited with conceptualising the undivided group’s telecom foray and also bought the assets, as part of the beleaguered RCom’s monetisation efforts. “It would be most appropriate for me to thank and acknowledge the support (and) guidance extended to RCom and me personally, by my brother Mukesh bhai Ambani,” the younger sibling told shareholders. It can be noted that Mukesh Ambani re-entered the telecom sector by buying out a company, which had successfully bid for 4G spectrum, along with which he also announced the end of a no-compete pact. His company Reliance Jio’s aggressive play, is widely blamed for wrecking the telecom sector, which has seen an erosion of profits, asset sales, bankruptcies and consolidation, following the entry of the deep-pocketed new entrant.
Anil Ambani said that there has been a ‘creative destruction’ of the telecom sector that has resulted in the creation of an oligopoly, which is going towards a duopoly and may be even a monopoly in the future. Banks are saddled with over Rs 7.7 lakh crores in debt and the financial troubles of operators have resulted in over 20 lakh job losses, he said. He said the residual company will serve 35,000 businesses through the enterprise, data centres, undersea cables and international voice calling verticals and will get half of its revenues from abroad.
RCom is ‘committed’ to exit these verticals, as well, to pay-off banks and will take a call on the same, at an appropriate time, Ambani said.
Source: https://ecis2016.org/.
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