Why Anil Ambani is richer despite telecom rout

RCom fell 0.5% to Rs 20.65 and is this year's worst-performing stock on the S&P BSE 200 Index

Reliance Communications plunge has yet to drag down the fortune of its Chairman Anil Ambani. The 57-year-old tycoon’s net worth has inched up this year, even as shares of his wireless unit have plummeted 39 per cent, wiping Rs 3,340 crore ($519 million) from its market value. At the same time, the Reliance Group founder’s wealth has swelled by about $82 million to $2.7 billion, according to Bloomberg’s Billionaires Index.
 
Gains from Reliance Group’s financial services arm Reliance Capital Ltd and Reliance Power Ltd have outstripped the erosion at a telecom unit battered by investors questioning its creditworthiness. The turbulence at RCom, as the phone unit is known, has come at a time when the group’s Reliance Infrastructure is planning to list a trust with some road assets and its Reliance Defence and Engineering Ltd business is working toward becoming a new profit pillar by winning weapons contracts.

 
A Reliance Group spokesman didn’t respond to an emailed request for comment. RCom’s lenders have agreed to a seven-month moratorium on its debt obligations, giving the company time until December to sell its towers to Canadian asset manager Brookfield Infrastructure Group and merge the wireless business with Aircel, Ambani said. The proceeds for these transactions will help the company reduce debt by 60 per cent, he said.
 
RCom earlier fell 0.5 per cent to Rs 20.65 on Friday and is this year’s worst-performing stock on the S&P BSE 200 Index. The Ambani family conglomerate entered the telecom industry in 2002 before a dispute led the group to divide assets in 2005 between Anil and older brother Mukesh, now India’s richest person. Reliance Communications — which went to Anil — has struggled in an increasingly competitive market, particularly after Mukesh’s Reliance Jio stormed into the market last year with offers of free services.  The company is in discussions with Chinese lenders about a waiver on interest payments on loans of about $1 billion until September, according to people familiar with the matter, who aren’t authorised to speak publicly and asked not to be identified. The credit rating for its rupee-denominated bonds and loans were slashed to D on May 30 by Indian rating firms ICRA Ltd. and CARE Ratings, their lowest score indicating default or that default is expected soon.