Reliance Communications (RCom) will exit telecom business entirely, now with the debt-laden company planning to monetise its enterprise business (in India) and submarine cable unit Global Cloud Xchange (GCX), but at an appropriate time. Once a leading telecom player, the Anil Ambani group firm intends to make a push into realty sector with the development of Dhirubhai Ambani Knowledge City (DAKC), with a project value of over ₹25,000 crore.
“We have decided that we will not proceed in this sector. And many other companies have taken a similar call. This is very much a writing on the wall,” Anil Ambani, Chairman of the company, told shareholders at its 14th AGM.
“As we have moved out of the mobile sector, we will monetise at an appropriate stage our enterprise business. Reliance Realty will be the engine of growth for the future of this company,” Ambani said, replying to a question.
RCom’s subsidiary GCX owns nearly 69,000 route km of sub-sea cables. It also owns the largest data centre in the country, which is located at DAKC with a 40-MW capacity. With more than 4.5 lakh sq ft of built-up area and a 6,000-rack capacity, IDC-5 is a green data centre. RCom owes more than ₹42,000 crore to a group of 38 foreign and Indian lenders, including Chinese banks. “The resolution process will be completed over the next few months,” he said. Earlier in his speech, Ambani said, “the future landscape remains formidably challenging”.
Speaking on the telecom vertical, he said it was saddled with more than ₹7.7-lakh-crore debt, while the hyper-competition over the last two years has led to more than 20 lakh job losses.
“There were multiple headwinds facing the mobile sector, and I had predicted a oligpoly, duopoly or even a monopoly. Fortunately for the billion telecom customers, this forecast has gone through,” he said, adding, this had an adverse impact on operators.
Separately, RCom is to develop DAKC, a 133-acre IT park in Navi Mumbai to create 30-million sq ft of commercial space.
Real estate play
DAKC is owned and operated by Reliance Realty, a wholly-owned subsidiary of RCom.
This project, as per an HDFC Realty study, will be valued at more than ₹25,000 crore.
The development of DAKC will create an area that is equivalent to 75 Nariman Points (a business district in downtown Mumbai) or 10 new Bandra Kurla Complexes (a commercial complex), Ambani added.
Terming the real estate assets as a “huge goldmine”, he said RCom intends to build a high-tech smart city, a green city and a green knowledge park at DAKC.