Shares of companies under both the Reliance groups gained on a day when the overall market scenario was marked by choppiness, mainly due to global news flow. The gains were primarily based on reports that companies owned by the two Ambani brothers — Mukesh and Anil — would work together to provide data services.
On Wednesday, when the benchmark Sensex ended the day marginally down, Mukesh Ambani-controlled Reliance Industries (RIL), the country’s largest private sector entity, gained 1.27 per cent to close at Rs 860.55.
On the other hand, companies of the Reliance Anil Dhirubhai Ambani Group (ADAG), controlled by the younger sibling, clocked even better gains. Shares of Reliance Communications (R-Com), which boasts of 50,000 telecom towers across 1,500 cities, gained 5.49 per cent to end the day at Rs 81.65. In the last month, the shares have gained nearly 16 per cent, rising from the low of Rs 70.45 it touched on October 4.
Market experts attribute the surge to reports that RIL is expected to use the tower and fibre optic infrastructure of R-Com to provide high-speed data services. Early this year, RIL had invited bids for leasing more than 25,000 towers, to mark its foray into the wireless broadband arena.”The move is extremely beneficial for both groups,” said independent analyst S P Tulsian. “For Reliance Industries it is difficult to get some 50,000 towers and around 300,000 km of optical fibers at the low price which R-CoM offers. For Anil Ambani, the news would increase the tenancy ratio of his company and will prove favourable in selling the tower business at higher valuations. Anil Ambani has been asking for some $5 billion for his tower business,” explains Tulsian who has been tracking the matter quite closely.
Interestingly, the northward surge was not limited to R-Com, as other ADAG companies also posted impressive gains. Reliance Power gained nearly four per cent to close the day at Rs 98.50. Reliance Broadcast Network and Reliance Infrastructure gained 2.51 per cent and 2.16 per cent, respectively.
Reliance Capital, holding company for the group’s mutual fund and insurance businesses, rose 1.48 per cent to settle at Rs 366.25. Reliance Mediaworks also ended the day on a positive note at Rs 93.10, up 2.08 per cent. Meanwhile, reports suggest, a core team has already been formed to handle the coordination between RIL and R-CoM. Any form of collaboration between the two would be the first major one since 2005, when the then Reliance Group was divided among the two brothers. Thereafter in May 2010, the two brothers terminated non-compete agreement.