Indian tycoon Anil Ambani averted a three-month jail term after his telecommunications company settled dues it owed the local unit of Ericsson AB, with just a day left before a court-set deadline.
Reliance Communications Ltd. has paid the required 5.5 billion rupees ($80 million) to Ericsson, both companies said. Repeated failures to pay and Ambani’s personal guarantee landed him in trouble last month, with the top court giving him a month’s notice to comply or spend time in prison.
The court order was a close call for Ambani, whose telecom, power and infrastructure ventures are straining under debt. Bloomberg-compiled data show his current net worth is about $300 million, compared with at least $31 billion in 2008, based on the current foreign-exchange rate. That marks a stunning fall for the scion of one of India’s most storied business families.
Ambani thanked his family for their support and said that he and his family “are grateful we have moved beyond the past,” in an emailed statement from Reliance Communications.
His slide down the wealth rankings also paints a picture that’s in stark contrast to the success of his elder brother Mukesh Ambani, who’s now Asia’s richest man with a net worth of $52.9 billion, adding $8.6 billion this year alone, according to the Bloomberg Billionaires Index.
Anil Ambani’s wealth decline ranks among the largest and fastest implosions of wealth in modern history ranking alongside the reported $70 billion loss Japan’s Masayoshi Son suffered during the dot-com crash after SoftBank Group Corp.’s stock tumbled.
Brazil’s Eike Batista was worth more than $30 billion at the start of the decade, according to the Bloomberg Billionaires Index. But his commodities and logistics empire evaporated under a mountain of debt and insider trading investigations. He gained the rare distinction of “negative billionaire” in 2015 when his net worth sank to more than $1 billion in debt.
Shares of RCom, as the telecom carrier is called, had slipped 9.1 percent on Monday in Mumbai before the announcement. The stock plummeted 60 percent in 2018 as Anil Ambani struggled to close a 2017 deal to sell spectrum, signal towers and fiber to Reliance Jio Infocomm Ltd., a new service provider controlled by his elder brother, for 173 billion rupees.
Failure to conclude that deal and other regulatory hurdles prompted the company to say that it may have to slip into bankruptcy.
As regulatory hurdles delayed the completion of his biggest deal, creditors such as Ericsson began tightening the noose and demanded past dues. The Swedish equipment maker’s relentless legal pursuit led to a settlement under which RCom was to pay half of the past claims, or 5.5 billion rupees — an offer backed by a personal guarantee from Ambani.
Failure to keep this promise after a personal guarantee from Ambani escalated into a contempt case, with the court eventually setting the deadline.
The threat of a prison term to Ambani also came as a rare warning to some of India’s richest borrowers whose firms have turned defaulters. The nation’s policy makers and courts have been cracking down hard on delinquency to help banks saddled with the world’s worst bad-loan ratio.
The Ambani brothers used to serve as executives at their father’s company. Following their father’s passing in 2002, the siblings got into a high-profile dispute over control of the sprawling conglomerate. In 2005, the two settled the feud by agreeing to carve up the empire into two. Anil Ambani got newer businesses such as telecom, power generation and financial services.
As Mukesh Ambani’s oil and petrochemicals businesses flourished, he re-entered telecom with the creation of Reliance Jio Infocomm. The nationwide 4G network, which debuted with free services in 2016, disrupted the industry forcing rivals including RCom to bleed, merge or exit.