The media blitz surrounding Reliance Jio's launch of 4G services (albeit for its employees, as of now) has been as overwhelming as the launch event itself had been a spectacle. But the real story is hardly about the rollout of a broadband service as it is about being a personal milestone for Mukesh Ambani, the chairman and managing director of Reliance Industries Limited (RIL). For more than ten years Ambani had been biding his time—to get into the telecom space.
When the undivided RIL had launched Reliance Infocomm in December 2002, it had been Mukesh's baby all the way, with neither sibling Anil nor any of the latter's representatives on the company’s board of directors. Infocomm’s parent company was Reliance Communications Infrastructure Limited (RCIL), which held a majority stake. Mukesh and Nita indirectly owned 50.5 per cent of the company through nine holding firms, and 45 per cent were held by RIL.
Infocomm had entered the telecom space with its CDMA services on this same day (December 28) in 2003, the birth anniversary of Mukesh's father, Dhirubhai. The disruptive marcom strategy at that time had been aggressive and almost all-pervading. It was Mukesh's own way of paying homage to his father, for he believed that Dhirubhai had chosen him to lead Reliance into the 21st century. All communications of the telecom newbie hovered around the late patriarch's dream of making voice calls on mobile phones cheaper than a 50-paise postcard, and the catchphrase was: kar lo duniya mutthi mein. And that, Infocomm did. Exorbitant call rates soon became affordable.
But in less than two years, Mukesh lost control over Infocomm. In June 2005, Ambani matriarch Kokilaben divided the assets of the Reliance group between the two brothers. Mukesh had to relinquish Reliance Infocomm, which together with Reliance Energy and Reliance Capital went to his younger brother. Moreover, there was a catch in the fine print: that of a non-compete clause in the truce. In other words, Mukesh could not venture into telecom again.
Not only did Mukesh have to give up a company that promised to deliver his father's dream, he had to sacrifice a cash cow as well. During the Ambani feud of 2004-05, the allegation that the Anil camp levelled against Mukesh was that the elder brother was using cash from the publicly-listed RIL to finance the personal telecom venture. And allegedly, this was being done in a manner that led to his friends and loyalists reaping huge profits. While RIL paid a premium to purchase shares in Reliance Infocomm, Mukesh and his friends got them for virtually free. As the worth of the telecom project rose, the value of personal stakes multiplied hundreds of times.
This became a sore point with Mukesh, and the blister surfaced in June 2008 when Anil announced that RCom (the new avatar of Reliance Infocomm) would merge with South African telecom giant MTN. Mukesh opposed the idea tooth and nail. His contention took off from a clause in the family memorandum of understanding (MoU), according to which neither of the brothers could sell their stakes in existing companies without granting the first right of refusal to the other. So, Anil had to first offer the shares to Mukesh and, only if the elder Ambani refused to buy them, could he sell those to MTN. With neither brother budging an inch, RIL initiated arbitration proceedings against RCom a month later. The MTN-RCom negotiation were called off the next day.
The brothers buried the hatchet only after the May 7, 2010 judgment of the Supreme Court which, by default, ruled in favour of Mukesh Ambani in the dispute over the supply and pricing of gas from the Krishna-Godavari basin. Later that month, the old non-compete agreement was scrapped, and it was agreed that each group could now encroach into the other's territory. In June, RIL announced plans to enter the broadband services industry, and bought a 95 per cent stake in Infotel Broadband Services, a successful bidder in all 22 telecom circles for which public auctions wwere held. Infotel became Reliance Jio Infocomm Limited in January 2013. The two brothers subsequently struck a deal on the sharing of infrastructural facilities, which was formally announced in June that year. It made good business sense for both. Jio wanted to hit the market soon and Reliance Communications already had the network, and the latter was heavily in debt.
Now, with the launch of 4G services on Monday, telecom has come a full circle for Mukesh Ambani. After ten gruelling years he is back in the space that he had wanted to create for himself, but had to yield it out during the parting of ways with Anil. The pomp and the glitz, with all the Reliance media establishments providing the requisite support, was essentially not so much about a product launch: it was Mukesh's way of telling the world that he is back.
