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Anil gets share of Infocomm troubles

BS Corporate Bureau in Mumbai | June 20, 2005 12:49 IST

Anil Ambani, the whistle blower, may face a daunting task in managing the group's telephony and Internet business as Reliance Infocomm Ltd is plagued with myriad problems, including an impending probe by the Central Bureau of Investigations.

Reliance Infocomm was in the eye of the storm after a call re-routing slur cast by state-run public sector units Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd. They had alleged that RIC had re-routed international calls as local calls through the networks of the PSUs, thereby, depriving the state-run companies of their due share of revenues.

The Reliance 'ownership issue'

The department of telecom had imposed a penalty of Rs 150 crore (Rs 1.5 billion) on Reliance Infocomm in March 2005, a move that was upheld by Telecom Dispute Settlement Appellate Tribunal. Even though, the company has denied any wrong doings, BSNL and MTNL had imposed a penalty of Rs 175 crore (Rs 1.75 billion) and Rs 60 crore (Rs 600 million), respectively.

The issue is currently pending with the Delhi high court, while the Indian security agencies, led by the CBI, have initiated a probe to check whether the country's national security was affected by the re-routing of international calls.

The agencies are also believed to be probing the e-mails of Reliance Infocomm's senior executives, including that of whistle-blower Akhil Gupta. He later quit Reliance as chief executive officer, corporate development of RIC to join technology group TCG.

Another issue that needs immediate attention will be recruitment of top-level management. The present brass -- most of whom had been brought in from RIL -- have decided to go back to the parent company. Manoj Modi, a close confidante of Mukesh Ambani, was one of the first to leave Reliance Infocomm.

Anil Ambani had lashed out at Manoj Modi saying that he and his wife held 0.7 per cent of Reliance Infocomm shares that were purchased at Re 1 per share. Modi moved over to the parent company.

Anil Ambani, who has been critical of the functioning of the group from the very beginning, is slated to bring in his experiences at BSES to RIC. Billing problems at BSES were successfully stemmed by Anil. It is one the moot issues at RIC too.

The younger Ambani is also expected to expand the company's fixed wireless phone business and create a 'hungama' like the CDMA rollout staged by the elder brother. But RIC officials denied this and said FWP was "already doing well, and there is no need for another Hungama".

A tug-of-war between Videsh Sanchar Nigam Ltd and RIC also needs to be settled on a war-footing. The company has already complained to the Telecom Regulatory Authority of India that the Tata group-managed company was blocking bandwidth at its landing points.

RIC had also mentioned that VSNL was preventing sales of international bandwidth at competitive rates to IT-enabled services in the country.

VSNL, on the other hand, has, in a letter to Trai, alleged that RIC was selling capacity "that was not available".

An immediate settlement of this issue is required for Reliance's future internet and broadband plans, with top a Reliance official stating that "they do not wish to lock horns with VSNL anymore ".

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