RCOM

Nov 20 (Reuters) - Reliance Communications Ltd RLCM.NS:

• INDIA'S ED: PROVISIONALLY ATTACHES MULTIPLE PROPERTIES WORTH 14.53 BILLION RUPEES IN RELIANCE COMMUNICATIONS FRAUD CASE

Source text: [ID:]

Further company coverage: RLCM.NS

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The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to add conversion of Indian rupee into US dollar in the second paragraph.

By Shritama Bose

MUMBAI, Oct 16 (Reuters Breakingviews) - All that glitters isn't gold when it comes to India's richest man. When Mukesh Ambani lists his telecom business in Mumbai next year, it will be a blockbuster event for the country's capital markets but it also will crystallise underwhelming returns for the world's biggest tech companies, private equity firms and sovereign wealth funds who backed his consumer unit in 2020. It heralds a reset of how foreigners view tycoons and competition in the country.

Five years ago when the Covid pandemic was shaking the world, Ambani's conglomerate Reliance Industries RELI.NS sold 1.5 trillion rupees ($16.99 billion) of stock in Jio Platforms to investors led by Meta Platforms META.O, KKR KKR.N and Saudi Arabia's Public Investment Fund; the flood of funds into India at the time was so large it caused a spike in foreign direct investment.

At 5.16 trillion rupees including debt, or $59 billion at current exchange rates, the landmark fundraising valued Jio's enterprise at 23 times its EBITDA, a multiple twice its nearest rival Sunil Bharti Mittal's Bharti Airtel and one reminiscent of a fast-growing technology startup.

Part of the hype was justified. The telecom unit Ambani founded in 2016 rose quickly by launching a bruising price war and was given a wide berth by India's competition authorities. Jio became the country's top provider of mobile services and helped to push down data tariffs to the lowest in the world. It even accelerated the bankruptcy of Reliance Communications RLCM.NS, led by Ambani's brother Anil. By the time Ambani welcomed outside investors, India's telecoms market had shrunk to a quasi-duopoly with a joint venture between Britain's Vodafone VOD.L and Kumar Mangalam Birla as a weak third player.

Fast forward and Jio had 498 million voice and data customers as of June 30 . Yet while this consumer business within Ambani's oil-to-retail conglomerate has continued to grow, it also has failed to live up to expectations in some striking ways.

Five years on from its fundraising, Jio's enterprise, including net debt, is valued at 10.6 trillion rupees, based on an average estimate of six brokers. That is nearly twice the value investors assigned it in 2020 or equivalent to an annualised return of nearly about 15%, one percentage point more than the annualised gross return of the MSCI India Index over a five year period. Private equity investors typically target returns of 20% and much higher in India.

Measured a different way, Jio's potential return could be even lower. The enterprise is worth just 8.7 trillion rupees if it is valued on 10 times its EBITDA, the same multiple Bharti Airtel commands. At that valuation, Jio would hand its backers including KKR, Silver Lake and TPG, an annualised return of just over 10%.

One problem is that Jio does not look like a "next generation technology platform". In 2020, Jio talked up a dazzling list of investments across its "digital ecosystem" including in "smart devices, cloud and edge computing, big data analytics, artificial intelligence, Internet of Things, augmented and mixed reality and blockchain". Although Jio doesn't have legacy 3G infrastructure to manage like its rivals, it still makes 87% of its revenue and 94% of its EBITDA from its basic communications unit Reliance Jio Infocomm RELJ.NS rather than from digital services, per CLSA analysts.

What's more, Jio's customers spend less than Airtel's. Average revenue per user has grown 60% over the last five years to 209 rupees ($2.37) but that lags the 250 rupees Airtel's India users churn out. Airtel's EBITDA margin for India and South Asia is also higher than Jio's by a staggering 770 basis points and its current offerings in cloud and artificial intelligence services closely mirror its challenger's.

Nor does Jio appear to have delivered on its strategic ambitions. Meta's Facebook pumped $6 billion in for a 10% stake but Ambani - whose Reliance conglomerate is also the owner of India's biggest retailer - did not lure millions of small grocers to transact on the payments system on WhatsApp, the U.S. company's social messaging platform - as was widely expected.

The rise of quick-commerce operations by Prosus-backed Swiggy SWIG.NS and Zomato-owner Eternal ETEA.NS killed Reliance Retail's 2022 attempt to enable grocery shopping through the messaging app. Similarly, Alphabet's Google GOOGL.O invested $4.5 billion in Jio but demand for the low-cost smartphone the duo launched in 2021 was weak; the telecom operator's wide reach didn't guarantee it a market.

Ambani's backers underestimated the strength of competition in India. They would have been better off if they had backed Bharti Airtel. Its shares have returned roughly 40% annually, including dividends, since 2020, significantly more than Jio looks set to deliver. Google enjoyed some of those spoils by hedging its bets: In 2022 it invested up to $1 billion in Jio's rival.

If Jio's returns are underwhelming, crystallizing them will be tough too. Ambani will need to launch one of India's largest initial public offerings. If 5% of the company's outstanding shares swap hands at a $120 billion valuation, Jio's bankers would need to find new owners for $6 billion of stock. That would be far too much for India's capital markets to swallow: Hyundai Motor India's HYUN.NS 279 billion rupee offering in 2024 remains the country's largest IPO, followed by Life Insurance Corporation's LIFI.NS 210 billion rupee deal in 2022.

Ambani could offer half the amount of stock or roughly $3 billion, using new rules from the Securities and Exchange Board of India but that would leave financial investors with billions of dollars of investments in Jio waiting for an exit; strategic investors, who may be willing to sit on their positions, bought about half of the $17 billion Jio initially raised.

Some of Jio's backers may still conclude that the investment was worth it. The dominance of family-led businesses in India often means that striking partnerships is increasingly seen as a matter of survival rather than choice for global companies and a way to protect themselves in the market. Global asset manager BlackRock BLK.N and China-founded online fast-fashion Shein are among others who are partnering with Ambani.

Yet an underwhelming payoff from Jio will strengthen the case for more scrutiny when foreign investors choose their local alliances in the future.

Follow Shritama Bose on LinkedIn and X.

CONTEXT NEWS

Reliance Industries will list its telecommunications unit by mid-2026, Chair Mukesh Ambani said at the conglomerate's annual shareholder meeting on August 29. "We are aiming to list Jio by the first-half of 2026, subject to all necessary approvals," he said.

Jio Platforms is targeting India's largest-ever initial public offering, IFR reported on September 5, citing unnamed bankers.

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on BOSE/[email protected]))

Oct 7 (Reuters) - Reliance Communications Ltd RLCM.NS:

• RELIANCE COMMUNICATIONS - TOTAL FINANCIAL INDEBTEDNESS AS OF SEPT 30 AT 404.1 BILLION RUPEES

Source text: ID:nNSE36WR9t

Further company coverage: RLCM.NS

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Sept 5 (Reuters) - Bank of Baroda Ltd BOB.NS:

• ANIL AMBANI CATEGORICALLY DENIES ALL ALLEGATIONS, CHARGES MADE BY BANK OF BARODA - STATEMENT

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** Reliance Infrastructure RLIN.NS and Reliance Power RPOL.NS both fall 5%

** India's federal agency filed a criminal case against industrialist Anil Ambani and his company Reliance Communications RLCM.NS on Saturday over a 30 billion rupee (~$344 million) fraud complaint brought by State Bank of India SBI.NS

** RLIN, RPOL say the criminal investigation has no impact on business operations and financial performance

** A spokesperson for Ambani told Reuters "Mr. Ambani strongly denies all allegations and charges, and will duly defend himself"

** An email query to SBI was not answered immediately

** RLIN down ~14% YTD while RPOL up 4.5%

($1 = 87.3650 Indian rupees)

(Reporting by Urvi Dugar)

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July 3 (Reuters) - Reliance Communications Ltd RLCM.NS:

• TOTAL FINANCIAL INDEBTEDNESS AS ON JUNE 30 AT 404.13 BILLION RUPEES

• AMOUNT OF DEFAULT AS ON JUNE 30 AT 288.26 BILLION RUPEES

Source text: [ID:]

Further company coverage: RLCM.NS

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July 2 (Reuters) - India's Reliance Communications RLCM.NS said late on Tuesday that State Bank of India SBI.NS has decided to report its loan account as "fraud" in a case dating back to August 2016.

The state-run lender would also report the name of Reliance Communications' former director Anil Dhirajlal Ambani to the Reserve Bank of India, the company said, under rules that require key management personnel of fraud accounts to be reported to the regulator.

The firm, which is undergoing insolvency proceedings, is a group firm of the Anil Ambani-led Reliance Group.

Anil is the brother of Indian billionaire Mukesh Ambani, who chairs the oil-to-telecom conglomerate Reliance Industries RELI.NS.

State Bank of India and Anil Ambani did not immediately respond to Reuters' requests for comment.

(Reporting by Hritam Mukherjee in Bengaluru; Editing by Mrigank Dhaniwala)

(([email protected]; X: @MukherjeeHritam;))

Adds shares in paragraph 9, details from the order from paragraph 10, other detail and backgroud throughout

By Jayshree P Upadhyay

MUMBAI, Aug 23 (Reuters) - India's markets regulator late on Thursday banned Anil Ambani, one of India's best-known businessmen, and 24 others from the securities market for five years on charges of diversion of funds.

The Securities and Exchange Board of India (SEBI) also imposed a fine of 250 million rupees (about $3 million) on Ambani, saying he orchestrated a scheme to "siphon off" funds from Reliance Home Finance Ltd >, a listed subsidiary of conglomerate Reliance Group of which he is chairman.

The ban means Ambani and the others affected are restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, the regulator said.

The regulator said the "fraudulent" scheme was to "siphon off" funds from Reliance Home Finance, which provides loans for housing and construction, by structuring those funds as loans to credit-unworthy borrowers.

Most of these borrowers were linked to "promoters", an Indian term for large shareholders with the ability to influence company decisions, the SEBI added.

A spokesperson for Reliance Group did not immediately respond to an email seeking comment.

Reliance Group - which spans financial services, infrastructure and telecommunications - was created in July 2006 following a demerger from Reliance Industries Ltd RELI.NS, which is led by Anil's brother Mukesh Ambani.

Anil has seen three of the largest firms within the group, including Reliance Communications, Reliance Capital and Reliance Infrastructure, undergoing bankruptcy or debt restructuring.

Reliance Home Finance RLIC.NS shares shed 5%, while among other listed entities within the group, Reliance Infrastructure RLIN.NS shares were down nearly 13% and Reliance Power RPOL.NS dropped 5% as of 1:24 p.m. IST (0754 GMT).

The regulator charged Anil Ambani on two grounds - diversion of substantial funds of the company to the detriment of the company and its stakeholders, and for acts of concealment from shareholders by manipulating its financial accounts.

The regulator said more than 90 billion Indian rupees worth of loans from Reliance Home Finance were made to "non-descript borrowers who had no demonstrable financial ability to repay any of it".

In addition, it said more than 50 billion rupees worth of loans were granted to entities connected to promoters of Reliance Group.

Given the obvious credit weaknesses of the borrowers, the probability of default by such borrowers - and hence the expected credit losses - was considerably higher than acknowledged in the financial statements, SEBI said.

“The facts of this case are particularly disturbing since it reveals a complete breakdown of governance in a large listed company, apparently orchestrated by and/ or at the behest of the promoter aided by the indulgent management of the company,” SEBI added.

The other 24 banned include executives of Reliance Group and other unlisted companies connected to Anil Ambani.
($1 = 83.8620 Indian rupees)

(Reporting by Jayshree P Upadhyay in Mumbai and Hritam Mukherjee in Bengaluru; Editing by Savio D'Souza and David Holmes)

(([email protected]; X: @MukherjeeHritam))