Reliance Jio
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Contents |
The origins
Mukesh Ambani's chats with children led to Jio
Gadgets Now Bureau, March 16, 2018: The Times of India
A lot has been said and written about how Reliance Jio really shook up the Indian telecom market, it may come as a surprise to many how the idea was actually conceived. Mukesh Ambani said how his daughter who was studying in Yale and was home for holidays. She wanted to submit some coursework when she turned to her father and said, “Dad, the internet in our house sucks”.
If his daughter complained about poor internet connectivity, then son Akash told him about the “digital world.” Mukesh Ambani recalled his chat with his son and how he said that “Dad, your generation doesn’t get it.”
While his conversation with his kids was imperative, Ambani said how India’s young generation also inspired the birth of Jio. He said, “India’s young generation that is far more creative, far more ambitious and far more impatient to become the best in the world.”
It’s a figure that is always quoted by Ambani and by Reliance Jio at almost every opportunity. Ambani once again reiterated how “Jio was able to acquire more than 100 million customers in just 170 days after its launch.”
There’s no denying that more Indians are consuming mobile and broadband data than ever. According to Ambani, “India has jumped from the rank of 155 to number one in the world in mobile broadband data consumption in less than two years.”
YEAR-WISE DEVELOPMENTS
Sept 2016- March 2017
See graphic:
Reliance Jio's journey, September 2016-March 2017
2020
FB buys 10% stake in Jio for ₹43,574 crore
World’s Largest Deal For Minority Stake In Tech Co
Mumbai/Bengaluru:
In what is being touted as the largest strategic investment for a minority stake by a technology company anywhere in the world, social media giant Facebook has agreed to invest $5.7 billion or Rs 43,574 crore for a 9.99% stake inJio Platforms, a unit of Reliance Industries (RIL). Between Jio's last reported subscriber base of 388 million and the 700 million-plus Indian users on FB platforms Facebook, WhatsApp and Instagram, their combined reach will be well over a billion, albeit with considerable overlap. The transaction gives Mark Zuckerberg, Facebook CEO and the world’s seventh richest man according to Forbes, an opportunity to deepen FB’s presence in India, which is its largest market in terms of users and where Mukesh Ambani, India’s richest man, has upended the telecom industry with cheap data plans.
The FDI deal, among the largest in India’s tech sector, will help RIL cut its $43 billion debt as about $4.1 billion is expected to be paid back by Jio Platforms to parent RIL.
If Jio Platforms were to be listed today (as on April 22, 2020), it would be the fifth most valued company in India after RIL, TCS, Hindustan Unilever and HDFC Bank. It is valued higher than India’s 2nd and 3rd largest tech companies, Infosys and Wipro, combined. Jio Platforms would also be 70% more valuable than Bharti Airtel (market cap about Rs 2.7 lakh crore) .
Facebook will get board seat on Jio Platforms
The Facebook investment values Jio Platforms--which runs apps like JioSaavn and JioCinema and holds investments in Reliance Jio Infocomm, operator of the world’s third largest mobile services network—at $57 billion (and $66 billion based on Reliance’s assumption of an exchange rate of Rs 70/$).
“At the core of our partnership is the commitment that Mark Zuckerberg and I share for the all-round digital transformation of India,” said Ambani, chairman, RIL, in a video message. RIL believes that comprehensive digitalisation will be an absolute necessity to revitalise the Indian economy in the post pandemic era.
Zuckerberg said there’s more to the financial investment it is making in Jio Platforms. “We are committing to work together on some major projects that will open up commerce opportunities across India,” he said on his FB page.
In October 2019, RIL consolidated the digital platform business under a separate subsidiary to mirror the structure of global companies like Alphabet-Google, Tencent and Alibaba which are largely debt-free, making it easier to attract investors into the new entity.
The RIL-FB transaction has been in the works since last year, with the first few meetings between the top teams including Ambani and Zuckerbeg revolving around understanding the potential areas of business collaboration. The conversations progressed with the initial target of closing the deal on March 31. But the outbreak of Covid-19 delayed the final lap of due-diligence.
Facebook will get a board seat and an “observer seat” on Jio Platforms. The deal is a binding agreement, according to RIL, but will need approval from antitrust watchdog Competition Commission of India. The announcement boosted RIL’s shares to close at Rs 1,363.6, up by 10.2% on the NSE.
The deal will also see a tieup between RIL’s retail unit and Facebook’s WhatsApp to leverage each other’s platforms to allow consumers to order items from their local kirana stores. This would enable Facebook to monetise its large user base, while also potentially serve as a platform to drive adoption of its payment business under WhatsApp which will compete with Google Pay, Alibaba and Soft-Bank-backed Paytm and Walmart-owned PhonePe.
“India has more than 60 million small businesses and millions of people rely on them for jobs. With communities around the world in lockdown, many of these entrepreneurs need digital tools they can rely on to find and communicate with customers and grow their businesses,” Zuckerberg said.
Ambani, said industry observers, wants Jio to be known as a digital services platform like US-based Google and China’s Alibaba, and not just as a telecom player. Digital services contributed 25% to RIL’s operating profit for the nine months of fiscal 2020. Morgan Stanley and AZB Partners advised Jio Platforms on the deal while Bank of America-Merrill Lynch assisted Facebook.
Facebook deal may keep RIL on road to zero-debt plan
The investment will help RIL deleverage its balance sheet even as oil market uncertainties have cast a shadow on a potential multi-billiondollar investment by Saudi Aramco. RIL’s debt has ballooned to over Rs 3 lakh crore following its entry into the telecom sector. At the shareholder meet last year, Mukesh Ambani announced plans to make RIL a “zero net debt” company by March 31, 2021.
