Ambani tie-up: Anil’s RCom signs deal with Mukesh’s firm, stocks soar

Mangalore Today/CNN-IBN

Mumbai, April 2: The telecommunication unit of Reliance Industries has signed a deal worth Rs. 1,200 crore to use Reliance Communications’ fibre optic network to roll out its 4G services, in what is the first business tie-up between two estranged billionaire brothers.

Reliance Industries, controlled by India’s richest man, Mukesh Ambani, is the only company to have 4G airwaves for all of India’s 22 service areas, but has yet to launch services.

 

 
The fibre deal with Reliance Industries is positive for debt-laden Reliance Communications, which is controlled by Mukesh’s estranged brother Anil, as it raises hopes for a bigger deal between the two companies to share Reliance Communications’ telecommunication towers.
 
The agreement for fibre is the first in a "comprehensive framework of intended business co-operation" between Reliance Jio Infocomm and Reliance Communications, the companies said in separate statements.
 
Shares of Reliance Communications rose as much as 17 per cent after the news.

RCom shares have been underperforming compared to other telecom stocks because of huge debts on the company’s books and market watchers say that it might be too early to celebrate. Phani Sekhar of Angel Broking said that while today’s developments were good news for traders but there’s no reason for investors to cheer yet.
 
"It’s a good sentimental upside, but if Rs. 1,200 crore is all that we are looking at, it will not solve Rcom’s problems," Mr Sekhar said.
 
RCom shares closed 11 per cent higher at Rs. 63.30 on the Bombay Stock Exchange, while Reliance Industries advanced 2 per cent to end at Rs. 793.95.

Other listed group companies of Anil Ambani also surged after the news. Reliance Capital gained 4.3 per cent, Reliance Infra rose 3.8 per cent, while Reliance Power shares gained 4 per cent.

Meanwhile, the BSE Sensex rose for the fourth day in a row. The Sensex gained 176 points or 0.93 per cent to end above the 19,000 mark after two weeks. The Nifty advanced 44 points to 5,748.