By Ketaki Gokhale - Sep 30, 2011 1:25 PM GMT+0700
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Indian billionaire Anil Ambani. Photographer: Adeel Halim/Bloomberg
Reliance Communications Ltd. (RCOM), the flagship company of Indian billionaire Anil Ambani, fell to a record in Mumbai trading and led other group stocks lower after investigators widened a phone-license probe.
Reliance Communications declined 7.4 percent to 71.9 rupees as of 11:50 a.m. in Mumbai, headed for its lowest close. Reliance Capital Ltd. (RCAPT) dropped 9.1 percent to 326.9 rupees, while Reliance Infrastructure Ltd. (RELI) lost 6.2 percent to 378.3 rupees.
The Central Bureau of Investigation said in court yesterday that they will extend the probe to see if Ambani’s Reliance Telecom Ltd. benefited from the sale of second-generation mobile-phone permits to ineligible companies. Three of Ambani’s executives, who were arrested on April 20, retracted a statement disowning responsibility, K.K. Venugopal, a lawyer representing the CBI said.
“This is going to continue until things get clearer -- until there are chargesheets and legal cases,” said K.K. Mital, fund manager at Globe Capital Market Ltd. in New Delhi. “The markets are going to keep reacting.”
Investigators are probing the role of Reliance Telecom, a Reliance Communications unit, in the transfer of Swan Telecom Pvt. to Mauritius-based Delphi Investments Ltd., Venugopal said. Reliance ADA Group Managing Director Gautam Doshi and Senior Vice Presidents Hari Nair and Surendra Pipara were among nine people charged in April and subsequently arrested by the CBI in connection with the probe of a sale of wireless permits to ineligible companies.
Auditors Report
The CBI is conducting further investigations after the Ambani group officials retracted an earlier statement and told the court they were not the real beneficiaries of a deal to transfer shares in Swan Telecom, a mobile-phone company that has been charged in the probe, Venugopal told the court.
There’s been no change in stance “by any of the Reliance executives,” spokesman Daljeet Singh said in a statement today. Neither Reliance Telecom nor Reliance ADA Group “are beneficiaries of any telecom license issued in January 2008.”
The Comptroller and Auditor General of India said in a report submitted to parliament on Nov. 16 that applications from companies including Swan Telecom should have been rejected because they were ineligible. Swan Telecom suppressed information and submitted false documents in its license application, the auditor said.
Department of Telecommunications rules stipulate that an operator can’t own 10 percent or more in another operator that provides services in the same telecom zone.
Reliance Telecom “held only 9.9 percent of the equity share capital of Swan Telecom at the time of filing the relevant license application in March 2007,” the company said in an e- mailed statement Feb. 13.
The company said “as per the provisions of the Companies Act 1956, the preference share capital held by Reliance Telecom in Swan Telecom is not to be included for purposes of determining shareholding levels.”
Reliance Telecom is a wholly owned unit of Reliance Communications, India’s second-largest mobile-phone carrier.
To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net
To contact the editor responsible for this story: Arijit Ghosh at aghosh@bloomberg.net
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