Reliance Communications to exit telecom to focus on real estate
Billionaire Anil Ambani today announced that the cash-strapped Reliance Communications will be completely exiting the telecom business to concentrate on real estate in future. The first priority for RCom, which is credited for democratizing telecom services through cheaper offers in the early 2000s, is to resolve its over Rs. 40,000 crore debt, Ambani told shareholders at the company's 14th Annual General Meeting in Mumbai.
There's huge realty opportunity at Dhirubhai Ambani Knowledge City: Anil
Pointing out to the 133-acre Dhirubhai Ambani Knowledge City (DAKC) on the outskirts of Mumbai, Anil said there's huge realty play opportunity that RCom's erstwhile corporate headquarters possesses, and pegged the potential value creation at the site at Rs. 25,000cr.
Anil expressed hope in resolving the huge debt issue
Regarding the debt RCom owes to a group of 38 lenders, including Chinese banks, Anil said he's confident of getting a resolution in the next few months, adding they are working on resolving the debt through a strategic debt restructuring process. He said other monetization measures, including the sale of telecom infrastructure and fiber to Reliance Jio, are at an advanced stage of closure.
I acknowledge the support Mukesh extended to RCom, me: Anil
In the meeting, Anil also said his company is awaiting final approvals for spectrum sharing and trading from the telecom department. Thanking his elder brother Mukesh Ambani, Anil acknowledged "the support (and) guidance extended" to RCom and him personally by his brother. Mukesh is credited with conceptualizing the undivided group's telecom foray and also bought assets as part of the beleaguered RCom's monetization efforts.
Reliance Jio wrecked the telecom sector in its opening
Notably, Mukesh 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.
Anil talks about the 'creative destruction' of telecom sector
Anil Ambani said there has been a "creative destruction" of the telecom sector that has resulted in the creation of oligopoly which is going towards a duopoly and maybe even a monopoly in the future. Banks are saddled with over Rs. 7.7 lakh crore in debt, and the financial troubles of operators have resulted in over 20 lakh job losses, he said.
Reliance to serve 35,000 business through enterprise, data centers
Moving further, Anil said the residual company will serve 35,000 businesses through the enterprise, data centers, undersea cables and international voice calling verticals and will get half of its revenues from abroad. Reliance Communications is "committed" to exit these verticals as well to pay off banks and will take a call on the same at an appropriate time, he said.
Reliance Realty to build DAKC in Navi Mumbai
The real estate company owned by Anil, Reliance Realty is a wholly-owned subsidiary of RCom, which will develop the IT and fintech park DAKC in Navi Mumbai. The company already has 3,000,000 sq ft of built-up space, which will be leased out to MNCs.
