Mukesh Ambani, worth more than $21 billion, is ranked by Forbes as the richest person in India. Among his many businesses, he owns the license to launch fourth-generation telecommunications and high-speed broadband services.
His brother’s company, worth about $6 billion, has more than 150 million cellphone subscribers, has built 75,000 miles of fiber-optic cable network, and has erected tens of thousands of cellphone towers across India.
In many ways, a business tie-up was a no-brainer. So when the news broke Tuesday that the siblings had struck a $220 million deal to share the vast fiber-optic infrastructure network, many appeared ready to believe that they had finally put their painful 2005 split and years of mutual recrimination behind them.
Within minutes of the announcement, their companies’ share prices rose. Powerful ministers in the national government phoned the brothers with congratulations. Bankers and fund managers have analyzed the news seemingly nonstop on TV.
“Ambani brothers strengthen their bond on fibre-rich diet,” read the lead headline Wednesday in the Economic Times newspaper Wednesday, which hailed the move as the “dawn of a new era.”
Family-run businesses are the backbone of Indian commercial life, accounting for 85 percent of the country’s companies. Some originated during the colonial period, some around the time of independence in 1947, and others, like the Ambanis’, in what is called the “License Raj” era, from the 1960s to the 1980s, when entrepreneurs operated under strict government constraints, according to Gita Piramal, author of “Business Maharajas.”
But the entrepreneurial families — an offshoot of India’s traditional joint-family system — are changing, business historians say, because of a new generation of heirs, many of them with business degrees from the West and unprecedented exposure to foreign competition.
“All these business families are working in a very, very competitive business environment today — competing with private, public and global players,” Piramal said in a telephone interview from Mumbai. Mukesh Ambani has bought several shale gas assets in the United States, and Anil Ambani has invested in media and entertainment businesses there.
The Ambani siblings “have taken the legacy of their father and expanded their business to global standards,” she said. “But coming together to do business after a split, that, too, at this scale . . . is unusual.”
The split occurred soon after the death of the siblings’ father and the patriarch of the business empire, Dhirubhai Ambani. The two sons were nothing alike. Anil, the younger, was flamboyant, schmoozed with politicians and raised the public profile of the businesses. Mukesh was publicity-shy, busying himself with backroom business strategies. What seemed at first to be complementary traits ultimately led to the rift.