Devesh
Core Member
It is a saga worthy of a Bollywood melodrama. The story of the Ambani brothers is one of vast fortunes and billionaire glamour, a bitter feud and a vicious business rivalry.
Now one of Britain’s biggest companies is caught in the crossfire of the 15-year battle between Mukesh Ambani and his younger brother Anil. Vodafone is suffering in India, to the tune of at least £4.4bn in write-downs so far, as the elder Ambani, India’s richest man, mounts a £20bn onslaught on the mobile market, hitherto Anil’s territory.
In September, Mukesh launched Reliance Jio, a new mobile operator with a brand new 4G network. Backed by the financial muscle of Reliance Industries, the petrochemicals empire he controls, the new service has boosted India in the global rankings as a digital nation.
In a bid to attract 100 million customers in record time, Jio is also giving Indians free voice calls and mobile data in the first few months. It was a missile aimed at India’s telecoms market, and has triggered a price war that has sent shares in Reliance Communications (RCom), Anil’s operator, tumbling to new lows.
Vodafone has been forced to respond with price cuts and a £4.4bn write-down, the latest blow in what has been a chastening decade in India. It has built a strong market position as the second-biggest operator with 200 million customers, but at massive cost. Including the cost of capital, it has invested more than £22bn. The business is now valued by analysts at around £6bn.
The Ambani battle could be the spur for drastic action. Vodafone is now understood to be examining its options for merging with one of its major rivals. No action is likely before Mukesh stops giving away mobile services, according to senior sources, but the crowded, heavily indebted field is widely seen as increasingly unsustainable.
“Consolidation must happen one way or another,” says a source familiar with Vodafone’s thinking. “It can be voluntary or involuntary, as some of the weaker players may fail financially.”
Anil has already sought a degree of sanctuary from his brother’s attack. RCom’s wireless arm is due to merge and create a joint venture with Aircel, an operator controlled by the Malaysian billionaire Ananda Krishnan. The deal is currently caught up in legal wrangling over Krishnan’s role in an allegedly coercive takeover more than a decade ago. Such claims of skulduggery are not uncommon in the Indian mobile industry, however.
How the Ambani family feud hit Vodafone's Indian mobile empire
Now one of Britain’s biggest companies is caught in the crossfire of the 15-year battle between Mukesh Ambani and his younger brother Anil. Vodafone is suffering in India, to the tune of at least £4.4bn in write-downs so far, as the elder Ambani, India’s richest man, mounts a £20bn onslaught on the mobile market, hitherto Anil’s territory.
In September, Mukesh launched Reliance Jio, a new mobile operator with a brand new 4G network. Backed by the financial muscle of Reliance Industries, the petrochemicals empire he controls, the new service has boosted India in the global rankings as a digital nation.
In a bid to attract 100 million customers in record time, Jio is also giving Indians free voice calls and mobile data in the first few months. It was a missile aimed at India’s telecoms market, and has triggered a price war that has sent shares in Reliance Communications (RCom), Anil’s operator, tumbling to new lows.
Vodafone has been forced to respond with price cuts and a £4.4bn write-down, the latest blow in what has been a chastening decade in India. It has built a strong market position as the second-biggest operator with 200 million customers, but at massive cost. Including the cost of capital, it has invested more than £22bn. The business is now valued by analysts at around £6bn.
The Ambani battle could be the spur for drastic action. Vodafone is now understood to be examining its options for merging with one of its major rivals. No action is likely before Mukesh stops giving away mobile services, according to senior sources, but the crowded, heavily indebted field is widely seen as increasingly unsustainable.
“Consolidation must happen one way or another,” says a source familiar with Vodafone’s thinking. “It can be voluntary or involuntary, as some of the weaker players may fail financially.”
Anil has already sought a degree of sanctuary from his brother’s attack. RCom’s wireless arm is due to merge and create a joint venture with Aircel, an operator controlled by the Malaysian billionaire Ananda Krishnan. The deal is currently caught up in legal wrangling over Krishnan’s role in an allegedly coercive takeover more than a decade ago. Such claims of skulduggery are not uncommon in the Indian mobile industry, however.
How the Ambani family feud hit Vodafone's Indian mobile empire
