Ambani succession, 5G, IPOs and spin-offs in focus as Reliance’s investor meet

Anticipation is high that the billionaire will use the speech for a series of big announcements

Mukesh Ambani’s once-a-year speech to investors has over time evolved into an eagerly-awaited pronouncement on his $222 billion empire. Reuters

Mukesh Ambani’s once-a-year speech to investors has over time evolved into an eagerly-awaited pronouncement on his $222 billion empire akin to Warren Buffett’s annual letters to Berkshire Hathaway shareholders.

This year, Reliance Industries' investors will be looking for insight on Monday around the company’s 5G roll-out, how he plans to unlock the value of his telecom and retail units through separate listings, and when and how his children will take over the reins.

Anticipation is high as the 65-year-old billionaire, who built Reliance into India’s largest company by market value and a powerhouse conglomerate, has used the speech for a series of big announcements.

These include the launch of his disruptive telecom service in 2016, Saudi Arabian Oil's proposed investment in Reliance’s energy business in 2019 and a strategic shift to green energy last year.

This year’s shareholder meeting comes as the refining-to-retail group faces the twin challenges of a global recession and the blistering rise of Gautam Adani, who eclipsed Mr Ambani as Asia’s richest man earlier this year and is emerging as an alternative power centre on the corporate landscape.

Reliance investors will have in mind how Mr Adani’s conglomerate split its business into different listings years ago, unlocking value, and will expect “clarity and specific time lines for the next big things” from Ambani’s more-centralised holdings, said Kranthi Bathini, equity strategist at WealthMills Securities in Mumbai.

Mr Adani’s wealth has surged $58bn this year riding the stocks rally compared with $3.3bn rise in Ambani’s.

Here’s where investors are expecting:

Succession

The patriarch indicated that succession planning at Reliance will be expedited in last year’s shareholder meet and reiterated it explicitly in December.

His three children — daughter Isha and sons Akash and Anant — are already holding various directorships in the group’s unlisted companies and are becoming more visible in their leadership.

Mr Ambani stepped down as the chairman of Reliance Jio Infocomm in June, making way for his elder son, Akash, who took over the helm at India’s largest wireless operator.

As rumours keep swirling around Mr Ambani’s health, investors will look for more concrete steps to be taken in leadership transition, with Isha, Anant and possibly his wife, Nita, taking on more responsibility.

5G roll-out

Reliance Jio Infocomm bought airwaves worth more than $11bn at a local spectrum auction as it sought to cement its edge over smaller rivals — Bharti Airtel and Vodafone Idea — in the roll-out of speedier 5G networks.

That will be key to boosting revenue and luring high-value users.

Investors will be looking for proof of the pudding here. The technology is yet to return profits for Asian wireless operations despite investing billions of dollars, even for those in China which have been offering 5G service since 2019.

Details like a nationwide roll-out date, tariff plans for 5G services as well as where demand lies for the service will be crucial for Reliance Jio to reveal.

The Ambani children may demonstrate some of the key features of the 5G services at the meeting, just as they’ve showcased new telecoms products in the past.

Ambani wedding reception — in pictures

Spin-offs, IPOs

The street has been waiting to get better clarity around the initial public offerings of Reliance Jio and Reliance Retail, especially after the two consumer businesses raked in $27bn from marquee global investors in 2020.

Both companies are market leaders in their respective sectors with a formidable lead over their rivals. Their listings — or even spin-offs — could propel Mr Ambani’s net worth.

“The timelines are crucial to get the mojo back for Reliance stock,” Ms Bathini said.

Reliance has gained just about 11 per cent this year compared with the more than 40 per cent rise by top performers in the S&P BSE Sensex.

New energy, old energy

The $76bn pivot towards green energy is the biggest transformation that Mr Ambani is helming currently.

It’s also a difficult transition given the conglomerate’s roots in petrochemicals and crude oil refining and the continued outsized contribution of the fossil fuel-led businesses in Reliance’s yearly revenue.

Investors will look for updates around last year’s announced plans to build four giga-factories to make solar modules, hydrogen electrolysers, fuel cells and storage batteries.

Mr Ambani has also been on a tear acquiring small green energy companies globally for expertise and technology. There are also plans to become among the world’s top blue hydrogen makers.

Going global

Mr Ambani emphasised his vision for the “internationalisation of Reliance” in his speech last year.

In the past year, Reliance has made overtures towards big overseas deals such as a potential acquisition of the British drugstore chain Boots, which was never completed.

Investors will want to see if the appetite for global acquisitions still exists amid a slowing worldwide economy.