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As discussed in my blog earlier NCA is the most interesting document in the Ambani Vs Ambani saga today. This ten year agreement is not only of great consequences but it’s also a window to vision of two brothers.
It is quite clear now that the war between the brothers is far from over and the look of things suggests that it may go on for years. And every time this war of words break out the most important document will be this NCA. I wish I could lay my hand on the original draft of the NCA, but meanwhile I would rely on news reports for my analysis. So, this is my first of the many blogs on NCA I would be writing. This focuses on telecom.
According to the NCA – Telecom is the sole domain of Mr. Anil Ambani including entertainment like multiplex, amusement parks etc. except content. But elsewhere in the document it is written that Anil Dhirubhai Ambani Group (ADAG) will have to give first right or refusal to Mukesh in case the group sells a part or whole of any of the businesses. Secondly it also mentions that once a part or whole of it is sold the NCA would terminate and Mukesh can then enter and compete in that business. Now that closes the option for Anil to sell out at high valuation as suggested by my blog earlier. But then it also creates a situation for an interesting possibility.
Reliance’s lesser know telecom venture – Reliance Telecom provides GSM based telecom service under the brand name Smart. It doesn’t make economic sense for Anil to operate on both technology platforms. So what option does he has? He cannot sell out as then Mukesh will be free to compete in telecom & entertainment. And as per DoT guidelines anybody should not hold more than 10 stake in two operators operating in the same circle…. Recently Tata’s have been issued a notice for operating both Idea & Tata Indicom and they have given assurance that they will sell out of Idea. Suppose a similar notice is issued to Anil bhai what will he do? The only option he would be left with is close down the business which is generally not aa viable option considering regulatory environment & financial implications. If he still try to go ahead and sell it not only Mukesh will get the right to re- enter the telecom & entertainment business but Anil would also have to give Mukesh first right to buy Reliance Telecom. And please note I am mentioning Entertainment business along with telecom. Mukesh might not be too keen on starting all over again in telecom but entertainment is something he surely will be interested in. Watch out for my other blogs on NCA to get the whole picture of the fight ahead.a
It is quite clear now that the war between the brothers is far from over and the look of things suggests that it may go on for years. And every time this war of words break out the most important document will be this NCA. I wish I could lay my hand on the original draft of the NCA, but meanwhile I would rely on news reports for my analysis. So, this is my first of the many blogs on NCA I would be writing. This focuses on telecom.
According to the NCA – Telecom is the sole domain of Mr. Anil Ambani including entertainment like multiplex, amusement parks etc. except content. But elsewhere in the document it is written that Anil Dhirubhai Ambani Group (ADAG) will have to give first right or refusal to Mukesh in case the group sells a part or whole of any of the businesses. Secondly it also mentions that once a part or whole of it is sold the NCA would terminate and Mukesh can then enter and compete in that business. Now that closes the option for Anil to sell out at high valuation as suggested by my blog earlier. But then it also creates a situation for an interesting possibility.
Reliance’s lesser know telecom venture – Reliance Telecom provides GSM based telecom service under the brand name Smart. It doesn’t make economic sense for Anil to operate on both technology platforms. So what option does he has? He cannot sell out as then Mukesh will be free to compete in telecom & entertainment. And as per DoT guidelines anybody should not hold more than 10 stake in two operators operating in the same circle…. Recently Tata’s have been issued a notice for operating both Idea & Tata Indicom and they have given assurance that they will sell out of Idea. Suppose a similar notice is issued to Anil bhai what will he do? The only option he would be left with is close down the business which is generally not aa viable option considering regulatory environment & financial implications. If he still try to go ahead and sell it not only Mukesh will get the right to re- enter the telecom & entertainment business but Anil would also have to give Mukesh first right to buy Reliance Telecom. And please note I am mentioning Entertainment business along with telecom. Mukesh might not be too keen on starting all over again in telecom but entertainment is something he surely will be interested in. Watch out for my other blogs on NCA to get the whole picture of the fight ahead.a
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