RCom loan fraud: The one Reliance company that failed

Reliance Communications (RCom), once a formidable force in India's booming telecommunications industry, had a rapid ascent and a spectacular decline. In the latest development about the beleaguered company, State Bank of India has decided to mark Reliance Communications’ loan account as “fraud” and report the name of Anil Dhirajlal Ambani (erstwhile director of the company) to the RBI, in a case that stretches back to August 2016. RCom has confirmed this move in an official filing.

RCom has been under a corporate insolvency resolution process since 2019. In its statement, the company reminded investors that any loans linked to the period before insolvency must be handled within the resolution plan.

Also Read: Reliance Communications says SBI to declare loan A/C as ‘fraud’, report Anil Ambani to RBI


RCom was at one point India's second-largest telecom operator. However, by 2019, the company was facing bankruptcy with billions of dollars in debt. It disclosed in April that as of March 2025, it had a total debt of 404 billion rupees ($4.71 billion). Besides management issues and intense competition, sectoral challenges such as price wars, heavy debt and plunging profitability which crippled India's telecom sector, also took their toll on RCom.

The fall of an Ambani company to such depths was not foreseeable more than two decades ago, when RCom was launched, because the names 'Reliance' and 'Ambani' had become synonymous with success.

The rise and fall of Reliance Communication

RCom was born out of the 2005 demerger of Reliance Industries Ltd., following a high-profile feud between the Ambani brothers, Mukesh and Anil. Younger brother Anil Ambani took charge of the telecom, power and financial services arms, including Reliance Infocomm, which he rebranded as Reliance Communications. RCom disrupted the market by slashing call rates and offering cheap handsets bundled with service plans. The “Monsoon Hungama” campaign in 2003 allowed customers to buy a phone for as little as Rs 501, opening telecom access to India’s lower-income segment.

While competitors invested in GSM, RCom adopted CDMA which allowed more efficient use of spectrum and supported data services earlier than GSM. RCom quickly built one of the largest telecom networks in India, leveraging the capital and execution capabilities of the Reliance group. The 2006 IPO was oversubscribed 73 times and raised over Rs 5,000 crore, demonstrating investor confidence.

RCom’s heavy investment in CDMA technology proved to be a double-edged sword. As GSM became the global standard, RCom was left behind in terms of device compatibility and vendor support. Competitors like Airtel and Vodafone capitalized on GSM’s global ecosystem, offering a wider range of handsets and better roaming. RCom belatedly entered the GSM market in 2008, but lacked the infrastructure and brand recall compared to incumbents.

RCom’s expansion into international operations (e.g., acquiring Flag Telecom and Yipes in the US), passive infrastructure (Reliance Infratel) and spectrum auctions led to a ballooning debt burden. In 2010, RCom spent Rs 8,585 crore in the 3G spectrum auction, stretching its finances and increasing reliance on short-term borrowing. Despite significant investments, RCom failed to convert spectrum and infrastructure into sustainable revenues due to declining ARPUs (Average Revenue Per User).

In 2016, Mukesh Ambani's Reliance Jio launched with free voice calls, ultra-cheap data, and 4G-only services. The entire industry reeled under this onslaught, but RCom was among the worst hit. RCom’s subscriber base plummeted and revenue dropped sharply. Attempts to restructure debt and revive operations, including a plan to merge with Aircel, collapsed in 2017 due to regulatory and financial hurdles. RCom was forced to shut its wireless operations in late 2017 facing huge debt, falling revenue and widening losses.

When RCom announced in 2017 a debt resolution plan that included selling of its assets, it had come a long way from the dominant position in the market less than a decade ago. In 2010, RCom had a market share of more than 17 per cent and the second position in the telecom segment. By 2016, its market share was less than 10 per cent and it was nowhere among the top firms. As it lost the market, its debt piled up. From nearly Rs 25,000 crore in 2009-10, the debt nearly doubled to Rs 45,000 crore in a decade.

Facing Rs 45,000 crore in debt, RCom began offloading assets: A tower business sale to Brookfield fell through. Sale of spectrum and fiber assets to Jio was partially successful, but not enough to avert default. In 2019, RCom filed for voluntary bankruptcy under the Insolvency and Bankruptcy Code (IBC). Creditors included banks, Ericsson and Chinese lenders like China Development Bank. Anil Ambani had agreed to pay Ericsson Rs 550 crore as a settlement failed to pay, triggering contempt of court petitions in the Supreme Court against chairman Anil Ambani. In 2019, elder brother Mukesh Ambani provided around Rs 450-crore bailout to Anil, saving him from a possible jail term.

The story of Reliance Communications is not just about one company’s fall from grace, but a mirror to the broader transitions in India’s telecom sector. From a disruptive pioneer democratising mobile access, RCom became a victim of its own inertia and the brutal competitiveness of the market it helped create. While Anil Ambani’s vision was bold, execution flaws and an inability to adapt sealed its fate.

Anil Ambani is making a comeback

A flurry of activity at his companies in the past few months suggest Anil Ambani, the founder and chairman of Reliance Group, is back in action. Clean energy and defence are emerging as the two growth areas Ambani seems to have picked to bring back the lost mojo into the group. Several tenders have been won and partnerships inked in these areas by the group entities recently. Stocks of two of his key companies, Reliance Infrastructure and Reliance Power, have been rising steeply.

Reliance NU Energies, a subsidiary of Reliance Power, secured an allocation of 350 megawatts (MW) of solar-generation capacity coupled with a 175MW/700MWh (megawatt-hour) of battery energy storage system. Another subsidiary, Reliance NU Suntech, recently signed a 25-year power purchase agreement with the Solar Energy Corporation of India (SECI) to develop Asia’s largest integrated solar and BESS project.

Much of the renewed investor confidence in Reliance Infrastructure stems from a key legal reprieve last month when The NCLAT suspended insolvency proceedings against the company. In May, Reliance Defence, part of the Reliance Infrastructure, secured a Rs 600 crore export order from Rheinmetall, a German defense and ammunition manufacturer. Another subsidiary, Reliance Aerostructure, has tied up with French aerospace major Dassault Aviation to manufacture Falcon 2000 business executive jets in India for global markets.