Anil-horribilis

Reliance: Billionaire tycoon Anil Ambani is dominating headlines again, for the wrong reasons. A leak from a government-commissioned report alleges that his flagship RCom telecoms operator under-reported revenues in its reports to the telecoms regulator, presumably in order to pay out less to the government. It’s terrible timing for Ambani, who is trying to resolve a dispute with estranged older brother Mukesh over a natural gas contract.

In fairness, the probe into was RCom’s accounts was ordered by India’s Department of Telecom (DoT) last December. That followed a July report from Indian brokerage firm Kotak which pointed out that RCom was reporting higher revenues to the market than to the Telecom Regulator of India (TRAI). Typically, 6-10% of an Indian telecom operator’s revenues are paid as licence fees and 2-10% for spectrum usage.

RCom, which has not received the latest report, says its accounts are in order. A definitive verdict is unlikely until the DoT builds a comprehensive picture of the reporting norms. After the RCom discrepancy first surfaced, audits were ordered of its big rivals, including Bharti Airtel and Vodafone Essar. It’s understood that a different auditor is looking at each operator.

The sensationalist RCom headlines are aimed to shock Indian investors, who are still reeling from last year’s $1bn fraud at IT services firm Satyam. But there’s no suggestion that RCom inflated figures to the market – just that it may have deflated figures for the authorities.

Still, the leak undermines a belated Anil Ambani media charm offensive aimed at his brother, following a fierce four-year campaign over pricing of gas from the country’s biggest oilfield. If Ambani fails to persuade his elder brother to settle the gas dispute and goes on to lose the court battle, his company Reliance Natural will face paying Mukesh’s Reliance Industries twice the expected price for gas to fuel his ambitious power plant projects.

The younger Ambani has long used the press to fight his battles; the strains on his investor relations are now mounting.