Ambani bros’ tie-up inevitable: CLSA

Mumbai: Will the Ambani brothers join hands for doing business? Yes, if a latest CLSA report is to be believed. And shares of Anil Ambani-led Reliance Communications (RCOM) gained 7% based on the report, which said that a tower/infrastructure-sharing deal with elder brother Mukesh Ambani's Reliance Industries (RIL) for its 4G roll out is "inevitable." 

    "Reliance Industries is the only pan-India 4G spectrum owner. Service roll out is reported to be in 2013 and its best option remains to lease towers from Reliance Infratel. Incremental tenancies will improve RCOM's financial health and EBITDA at 10-15%," said the CLSA report, adding that we look at value-unlocking deals as well as an easing of the company's debt burden of $6.7 billion. An RIL spokesperson declined to comment saying it does not comment on market rumours or speculation. A mail sent to RCOM failed to evoke any response till the time of going to press. Talks of the Ambani brothers coming together for business started when both the brothers were seen playing Dandia (Gujarati folk dance) together at their ancestral home in Chorwad, Gujarat on December 28, 2011 to celebrate the birth anniversary of their late father Dhirubhai Ambani, founder of Reliance Industries. This was after the brothers called a truce and scrapped the no-compete agreement in 2010. 
    RCOM officials also attended a vendors meeting called by RIL last year seeking to lease towers. However, RIL is yet to award any contract. Sources say RIL is yet to decide between its 'assetlight' strategy and 'build your own infrastructure' as building 1 lakh telecom towers would cost another $4 billion to RIL and would delay its 4G launch by at least a year. 
    "All depends on RIL's strategy as Mukesh Ambani is keeping all the cards close to his chest. In RIL's 2010 AGM, he talked of 'asset light' strategy for 4G rollout. Last year, reports suggested that RIL plans to build its own towers, which may further delay the 4G rollout," said a Mumbai-based analyst.

Anil and Mukesh Ambani (right)