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Indian telecommunications company in hot water

Anil Ambani

Shares of the family-controlled telecommunications group, headed by second-generation Anil Ambani, had been one of the worst performers in India’s stock exchange last year, and had slipped from Rs 800 (€13) to Rs 93 (€1.5).

This fall in value of the flagship company adds more worry for Ambani, who is in the middle of a federal investigation by India’s anti-corruption body. He has been accused of selling mobile phone licenses to companies at a low price, which allegedly cost the Indian government around $39 billion.

At the same time, the telecoms company’s net debt rose to €5.24 billion in 2011 from around €3 billion a year before, leading to more concern about the company’s performance. Shares of sister companies Reliance Infrastructure and Reliance Power also fell by around 5% each last week.

Reliance Communications was originally a part of Reliance Industries, founded by Dhirubhai Ambani in 1966. He failed to leave a succession plan, so his death led to one of the most famous family business feuds of the last 10 years.

The rivalry between brothers Anil and Mukesh split Reliance Industries into two fractions – Mukesh heads Reliance Industries, while Anil took charge of Reliance Communications. The Mumbai-based telecoms company announced 2009 revenues of around $1.3 billion.

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