RCom to exit telecom totally, to focus on real estate sector

The first priority for RCom, which is credited for democratising telecom services through cheaper offers in early 2000s, is to resolve its over Rs 40,000 cr debt, he told shareholders at the company’s 14th annual general meeting here.

“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… “As we have moved out of the mobile sector, we will monetise at an appropriate stage our enterprise business. Reliance Realty will be the engine of growth for the future of this company,” Ambani said.

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 cr.

RCom owes over Rs 40,000 cr 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 sale of 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.

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.

Mukesh Ambani had 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 on Tuesday said there has been a “creative destruction” of the telecom sector that has resulted in creation of 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 cr 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.

Reliance Capital Chairman Anil Ambani said the company aims to reduce its debt by exiting all the non-financial businesses in its portfolio in the next 12-18 months. The company is looking to list it’s general insurance company, Reliance General Insurance, in the current financial year. 

“We want to reduce debt at the Reliance Capital, the parent company, level, considering it is a core investment company,” Ambani said. “It will be driven by divestments of all our non-core businesses. Every business not related to the financial services business will not be in our portfolio in the next 12-18 months,” he added. Its home finance company- Reliance Home Finance – has been approached by global firms to partner in affordable housing segment, according to Ambani.

 “We are in discussion with a strategic partner to take a large stake in the company. As that transaction concludes in next few months, we will be transforming the company, and we will be amongst the most profitable home finance company in India,” he said. The company’s ED, Anmol Ambani, said Reliance Health Insurance is going to be launched in this quarter.