Ambani brothers bury hatchet with telecom deal

Updated 03 April 2013
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Ambani brothers bury hatchet with telecom deal

MUMBAI:India’s billionaire Ambani brothers, who fought a very public feud for spoils of their father’s business empire, signed a $220-million deal in the first tangible sign of a corporate reconciliation.
Reliance Jio Infocomm, the telecom unit of Mukesh Ambani-led Reliance Industries, signed the agreement with Reliance Communications, the flagship firm of the Anil Ambani group, to share their fiber-optic communications networks.
The long rumored pact is the “first in an intended comprehensive framework of business co-operation” between Reliance Jio and RCom, to use each other’s infrastructure across Indian cities, the companies said.
This will provide “optimal utilization of existing and future infrastructure of both companies on a reciprocal basis,” they added in separate but identical statements.
There have been increasing signs of a warming of ties between the brothers since their fight for control of Reliance erupted after their rags-to-riches father, Dhirubhai, died in 2002 without leaving a will.
“It is a positive sign that the brothers are keen to work together,” said a fund manager with a state-run brokerage firm, who asked to remain unnamed.
The pair ended up splitting the Reliance group left by their father that was India’s most valuable listed company.
After a protracted court case that saw their mother, Kokilaben, act as peacemaker, the brothers agreed to bury the hatchet and tear up a non-competition agreement that prevented them from entering the same sectors.
In 2011, Mukesh and Anil came together to dedicate a memorial to their father, and their mother declared the enmity over, telling reporters: “There is love between the brothers.”
The new agreement, while small in value, was the first tangible evidence of an end to the business rift between Mukesh, India’s wealthiest man, and his younger sibling Anil.
News of the agreement heightened speculation among analysts about further collaboration between the brothers as well as about a possible merger of the two Reliance telecom companies.
RCom’s shares leapt as much as 17.2 percent to a high of 66.9 rupees after the news before retracing some of their gains to close up nearly 11 percent at 63.3 rupees. Mukesh Ambani’s Reliance Jio is unlisted.
The deal will help Reliance Jio Infocomm roll out its high-speed fourth-generation (4G) services. Mukesh Ambani is planning to establish an ultra-fast 4G telecommunications carrier later in 2013.
Analysts say sharing fiber-optic networks and other infrastructure such as telecom towers could prove mutually beneficial by helping Mukesh reduce costs at the same time as boosting the fortunes of Anil’s debt-laden group.
RCom will have reciprocal access to the optic fiber infrastructure which Reliance Jio will build in the future, the companies said.
“Both brothers have a presence in telecom. Their working together makes sense at a time when the cost of doing business is high and the economic environment is tough,” said Sonam Udasi, head of research with IDBI Capital.
sal-pmc/ia


New Zealand to conduct own assessment of Huawei equipment risk

Updated 10 min 52 sec ago
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New Zealand to conduct own assessment of Huawei equipment risk

  • Huawei faces intense scrutiny in the West over its relationship with the Chinese government
  • Several Western countries had restricted Huawei’s access to their markets

WELLINGTON: New Zealand will independently assess the risk of using China’s Huawei Technologies in 5G networks, Prime Minister Jacinda Ardern said on Monday after a report suggested that British precautions could be used by other nations.
Huawei, the world’s biggest producer of telecoms equipment, faces intense scrutiny in the West over its relationship with the Chinese government and US-led allegations that its equipment could be used by Beijing for spying.
No evidence has been produced publicly and the firm has repeatedly denied the allegations, which have led several Western countries to restrict Huawei’s access to their markets.
The Financial Times reported on Sunday that the British government had decided it can mitigate the risks arising from the use of Huawei equipment in 5G networks. It said Britain’s conclusion would “carry great weight” with European leaders and other nations could use similar precautions.
New Zealand’s intelligence agency in November rejected an initial request from telecommunications services provider Spark to use 5G equipment provided by Huawei.
At the time, the Government Communications Security Bureau (GCSB) gave Spark options to mitigate national security concerns over the use of Huawei equipment, Ardern said on Monday.
“The ball is now in their court,” she told a weekly news conference.
Ardern said New Zealand, which is a member of the Five Eyes intelligence sharing network that includes the United Kingdom and the United States, would conduct its own assessment.
“I would expect the GCSB to apply with our legislation and our own security assessments. It is fair to say Five Eyes, of course, share information but we make our own independent decisions,” she said.
Huawei New Zealand did not immediately respond to a request for comment. Spark said it was in discussions with GCSB officials.
“We are working through what possible mitigations we might be able to provide to address the concerns raised by the GCSB and have not yet made any decision on whether or when we should submit a revised proposal to GCSB,” Spark spokesman Andrew Pirie said in an emailed statement.
The Huawei decision, along with the government’s tougher stance on China’s growing influence in the Pacific, has some politicians and foreign policy analysts worried about potential strained ties with a key trading partner.
Ardern’s planned first visit to Beijing has faced scheduling issues, and China last week postponed a major tourism campaign in New Zealand days before its launch.
Ardern said her government’s relationship with China was strong despite some complex issues.
“Visits are not a measure of the health of a relationship they are only one small part of it,” she said, adding that trade and tourism ties remained strong.