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Ambani bros in talk for possible telecom deal?

business Updated: Nov 03, 2011 15:47 IST

Reliance Industries, controlled by billionaire Mukesh Ambani, is in talks with several telecom players, including younger brother Anil, to launch an upcoming broadband and Internet service.

Mukesh Ambani's search for an infrastructure player has raised speculation that the two siblings could work more closely together after ending a long-running feud over the spoils of their father's vast business empire.

"We are in talks with everyone who has ready infrastructure. We are not going to build towers ourselves," a company source told AFP on condition of anonymity.

Reliance may consider using Anil's Reliance Communications (RCom) telecom tower infrastructure to launch Mukesh's broadband and wireless business. A deal is yet to be finalised, the source added.

Mukesh and Anil's father Dhirubhai Ambani, who built up the Reliance empire from a lowly textiles firm to multi-national conglomerate, died in 2002 without leaving a will.

The brothers agreed to bury the hatchet only in 2010, tearing up a non-competition pact that prevented them entering the same sectors.

The pair said the move would provide greater "operational and financial" flexibility to their respective groups.

Last year, Mukesh Ambani, chairman of the oil and gas firm Reliance Industries, announced a re-entry into the telecom and broadband segment after a gap of five years.

His company -- India's largest private sector firm -- acquired Infotel Broadband, which was the only company to win an India-wide licence at an auction for fourth-generation broadband wireless services.

But analysts say the tycoon, who is India's richest man, still needs infrastructure to boost his Internet business, which he sees as having "transformational" potential.

India currently has a low broadband penetration relative to its size and population.

Reliance has been diversifying revenue streams in addition to its core energy and oil exploration in areas such as broadband, communications, retailing and hotels.

Anil Ambani's RCom, on the other hand, is in a cut-throat price war in the world's fastest-growing mobile phone sector, where tariffs have been cut to less than one US cent a minute.

RCom, the flagship unit of the Reliance Anil Dhirubhai Ambani Group, is seeking to sell a stake in its tower business after talks with telecom tower major GTL Infrastructure fell through last year.

It has so far been unsuccessful in its fundraising plans to reduce a heavy debt burden in excess of $7 billion.