Ambani Brothers Rivalry: RCom, Liquidation, and future

Kokilaben Ambani may have divided the Reliance Group ‘fairly’ among the sons, but the market rivalry has been far from peaceful. In recent developments, Anil Ambani’s Reliance Communications, aka RCom, has 270 days to pay its entire debt or the company will have to liquidate. This comes after RCom’s spectrum, fiber, and tower assets sale to Mukesh Ambani’s Reliance Jio Infocomm Ltd. went sour.

With this, Mukesh Ambani is speculated to have better leverage while bidding for the falling company’s assets. Apurva Jayant, a partner at L&L Partners (law firm), said, “The value of RCom if it goes into liquidation will be destroyed and with this sword hanging, the bidders may negotiate harder in the insolvency process with creditors and bring down prices.”

After the announcement hit the market, nearly every part of Anil’s Reliance units suffered major share dips. RCom shares fell 49 per cent within two days as it filed for insolvency. Similarly, Reliance Power Ltd, Reliance Naval and Engineering Ltd, and Reliance Capital Ltd shares went down by more than 41 per cent, 22 per cent, and 17 per cent respectively.

On the other hand, Mukesh Ambani’s Reliance Industries Ltd received a consequent share impetus and crowned him the richest man in Asia. The story is yet to unfold the fate of RCom assets. While Mukesh is speculated to take a major share of the chunk, RCom assets have certain legal boundaries on their sale as directed by the National Company Law Apellate Tribunal.

People had hoped for RCom to register a path-breaking comeback by recovering their debts via assets sale. Even in the beginning of 2017, Anil Ambani had reassured the stake holders to maintain faith with profitable days on the cards. However, it did not happen.  

The telecommunication angle gained the spotlight in 2010 as the non-compete clause between the brothers was nullified, thereby denoting the return of Mukesh Ambani with Reliance Jio. The company entered the market and topped the ladder of 4G wireless network with Rs 1500 worth mobile phones and minimal priced services.