As defence gains prominence, media loses sheen for Anil Ambani

Plan is to monetise media assets and sharpen focus on defence

Fifty-six-year-old industrialist Anil Ambani has taken many bold bets in his life. But his most ambitious to date appears to be his foray into the defence sector, a business he stepped into with the surprise acquisition of Pipavav Defence a year ago.

That deal - valued at Rs 2,400 crore - meant that Ambani, the younger brother of Reliance Industries' chairman Mukesh Ambani, was willing to let go of a few investments he'd made in the past. This included media, a business where Ambani had invested across the value chain. It now appears to be gradually losing sheen for the business tycoon, if sources in the know are to be believed.

In the last few years, the chairman of Reliance-ADAG has exited virtually all his media ventures barring broadcast (under Reliance Broadcast Network or RBNL) and film production (Reliance Media Works). But the decisive break from the past came last week when news travelled that RBNL, which consists of his TV and radio interests, was looking to divest partial stake to private equity or strategic investors.

Highly placed sources have told Business Standard that the plan is to monetise all media assets (whatever is left of it) and sharpen focus on defence.

“The parent company has a figure in mind that they want to raise through the stake sale. How much stake that amount translates into will be decided when the deal goes through, but it will be around 40 per cent,” says an executive privy to developments. 

Persons in the know say that part of the proceeds from the stake sale will be used to retire debt, which at the group level stood at nearly Rs 1 lakh crore (for 2014-15). Full-year 2015-16 numbers are not available yet.

But what Ambani is doing they say is part of a larger gameplan of cleaning up his books. Group executives have told Business Standard that Ambani wishes to pare debt by as much as 50 per cent by selling assets across the board. 

That process had been set into motion in November 2015 when group firm Reliance Infrastructure agreed to sell a 49 per cent stake in its electricity generation, transmission and distribution business in Mumbai to Canadian pension fund Public Sector Pension Investment Board (PSP Investments).

In December last year, Reliance Communications entered into a non-binding pact to sell its mobile phone towers business to a consortium led by TPG Capital Management.

While these transactions are yet to close, it has concluded the sale of its cement business to Birla Corp for Rs 4,800 crore last month.

Additionally, Ambani has initiated talks to sell his eleven road projects in Reliance Infrastructure for Rs 9,000 crore to global pension funds. 

Not out of media yet

Persons in the know say that a complete exit from radio is unlikely owing to regulatory hurdles that prevent sale of a business in the aftermath of an auction. Rules stipulated in the phase three radio auctions in particular said that operators who had acquired frequencies could not exit the business for the next three years. 

RBNL, which operates the Big FM franchise, had acquired 14 frequencies in the phase three auctions for a total Rs 117 crore.  So clearly no exit is possible just yet, persons in the know said.

In the news space, Business Broadcast Network - the news arm under Reliance-ADAG - will continue to run the business new channel minus the Bloomberg name and logo from April 1. It snapped ties with the latter recently and is now in the process of rebranding and relaunching the channel.

Entertainment channels Big Magic and Big Ganga continue to operate as they are. The first one targeting Hindi-speaking audiences. The second one addressing Bhojpuri-speaking viewers, where it is estimated to have a 30 per cent share of the Bhojpuri GEC market.