Anil Ambani made an error by visiting China for loans and approach some global leaders like Robert Mugabe (Zimbabwe President), Mahinda Rajapaksha (Sri Lanka President), Nawaz Sharif and Imran Khan (Pakistan PM), Abdulla Yameen (Maldives President), Jacob Zuma (South Africa President), Najib Razak (Malaysia PM) etc. made the error of taking loans under Belt and Road scheme. this can be the long story behind it.
At the Reliance Communication’s 14th annual general meeting in September 2018, Anil Ambani said some 20 lakh jobs had been lost to continuing hyper-competition in Indian telecom sector. RCom (Reliance Communications) chairman also said the telecom sector may eventually become a monopoly, having been “creatively destroyed.” He said the “creative destruction” of the telecom industry, underlined by high cost and predatory pricing by some, had created an “oligopolistic structure that was now rapidly moving toward a duopoly, and will eventually become a monopoly,” with “rules of mobile telephony” having been rewritten within that last two years (2016-18).
Anil Ambani said the telecom industry continues to reel under Rs 9.7 lakh crore of debt, which has led to the halving of its employment base. “From being amongst the highest employers, with 40 lakh direct and indirect employees, telecom employees have lost 50% jobs,” he said. Debt-ridden Rcom purged jobs by about 94 per cent to three,400 by mid-2018, from peak level of 52,000 in year 2010. In 2010, RCom had a market share of quite 17 per cent and therefore the second position within the telecom segment. By 2016, its market share was but 10 per cent and it absolutely was nowhere among the highest firms. because it lost market, its debt accrued. From nearly Rs 25,000 crore in 2009-10, the debt has nearly doubled to Rs 46,000 crore by early 2018. Hyper-competition, said Ambani, had also resulted within the government losing out on revenues by way of license fees and spectrum usage charges. “Collections are down nearly 25 to stand out from Rs 1,80,000 crore to Rs 1,30,000 crore.” Going forward, Ambani said RCom would be a target land business (transition from telcom technical domain to unrelated realty field for its employees!), wherein, subsidiary, Reliance Realty would be “the new growth engine.” Reliance Realty would develop its 133-acre parcel into a mall hub that has been valued by HDFC Realty at upwards of Rs 25,000 crore.
Hyper competition isn't the sole reason for the decline of Rcom, the most reason is over dependence on cheap shoddy Chinese telecom products. This explains why a second rank telecom operator had to exit the market when Bharti Airtel, Vodafone and Idea Cellular managed to survive.
Rcom had its own share of technical problem arising from unreliable Chinese brands. UT Starcom was a Chinese of DLC (digital loop carrier) utilized in local loop or connection distribution. UT Starcom DLC devices had problem of rain water seepage affecting customer’s telecom operations. Maipu router was a Chinese router brand utilized in India only by Rcom and it had quality issues. Surprisingly, Maipu router configuration and instruction interface is strictly similar as Cisco router IOS (USA based market leader) which implies Chinese brands can copy anything from US. Sealed battery bank, telecom tower or base station (BTS) cables, CDMA mobile handsets, even steel structures like nut bolts etc. were all Chinese import brands with poor period of time. Modems were of unknown Chinese brands whereas competition like Airtel and Vodafone used more rugged Israeli modems. it had been too late within the day when Rcom realized quality problems with Chinese brands, discontinued CDMA service and moved its users to GSM but only to shut services!
RCom had to shut its wireless business late 2017 and is selling related assets to Reliance Jio to cut back its Rs 46,000 crore debt. The asset sale process is turbulent as vendors filed legal cases. Anil Ambani said that his group intended to exit the telecom sector completely over time. RCom had inked definitive binding pacts with Jio for the sale of its wireless spectrum, tower, fibre and media convergence node (MCN) assets as a part of a Rs 18,000-crore asset monetization commit to repay its 39 lenders.
The stark difference between the performance of 2 brothers was highlighted in November 2017 when Anil's RCom defaulted on its bond payments but Mukesh's Reliance Industries sold dollar bonds at the most cost effective rate by a non-financial Indian issuer ever. Mukesh Ambani in 2018 toppled China’s Jack Ma as Asia’s richest man, after driving a telecommunications revolution in India that propelled his petrochemicals conglomerate Reliance Industries Ltd. into the $100 billion club. His personal fortune has swelled to $43.1 billion, $5.2 billion prior Jack Ma and just earlier than Microsoft Corp.’s former chief, Steve Ballmer.
At the business empire de-merger, the wireless division appeared to give Anil Ambani a number of the splendid opportunities - crude prices had climbed to a then-record price of quite $60 a barrel in 2005, sparking concern that refiners’ margins may get eroded. India’s burgeoning mobile-phone market was hailed because its the future. Dhiru bhai Ambani, who founded Reliance Industries, was an icon of India's equity culture. When he died in 2002, Reliance had over two million shareholders, the most important ever investor base for any Indian company. When it got listed in 1977, it had attracted thousands of small investors to a market dominated by state-run financial institutions. The company's annual shareholders' meetings were so well attended, they'd to be held during a structure and struggle. The name 'Reliance' spelled shareholder value
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