Reliance Jio: Why are companies like Google and Facebook Investing in this Indian Giant?

What is Reliance Jio, and why is it a major player in India?

MyJio, JioBrowser, JioCloud, JioTV, JioCall, JioSecurity, JioHealthHub, JioCinema and the list goes on. These are just a few of the compelling services provided by Reliance Jio Platforms, a subsidiary of Reliance Industries Limited (RIL). Reliance Industries Limited is an Indian multinational conglomerate company that is headquartered in Mumbai, India which owns businesses across the country. It engages in an extensive range of sectors including, but not limited to, energy, textiles, natural resources, retail, media and telecommunications. Reliance Industries Ltd is one of the top-ranking Indian companies on the global Fortune 500 list with its current ranking of 106, a substantial improvement from its previous position of 148. The man behind this astounding company is none other than Asia’s richest and now the world’s seventh-richest man, Mukesh Ambani.

Reliance Jio labelled as the “world’s fastest-growing technology company”, became the world’s largest telecom service provider in 2019 with 340 million subscribers across the country (a number greater than the population of USA). This staggering number was achieved just within three years of its launch in 2016. Jio’s fast growth can be attributed to its vision that is providing people, from all strata of society, with an opportunity to keep up with the latest digitalisation.

“Jio’s vision is to transform India with the power of the digital revolution – to connect everyone and everything, everywhere – always at the highest quality and the most affordable price.”

What have its recent contributions been, and why is it so popular?

Jio Platforms Limited (Jio) plans to create a massive digital ecosystem for a billion Indians and has already invested $50 billion to achieve its goal. What sets this establishment apart is that it has developed several internal capabilities since its inception, those being the following key digital technologies: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Big Data, Augmented Reality/Virtual Reality (AR/VR), Internet of Things (IoT), Blockchain, Artificial Intelligence (AI), Machine Learning, Edge Computing, Natural Language Processing, Robotics and so much more. Its capabilities are enabling Jio to create a variety of services that will guide its path to creating a digital society for the people of India. Reliance Industries Ltd believes that besides “catalysing productivity and overall economic growth” Jio will bring about significant shareholder returns over the next several decades. A prediction that is already seeing several precursors, denoted by the recent influx of investments made by the world’s most popular companies.

Jio Platforms grew its popularity and succeeded in acquiring the world’s largest subscriber base through its largest subsidiary Jio Infocomm Limited. This subsidiary made its mark in the telecommunications sector in 2016 by offering free unlimited 4G data and calls for its customers for an initial period of six months. This strategy was deployed with hopes of converting these customers into ones who would pay for the services. Initially doubted, this strategy made Jio’s main competitors Airtel and Vodafone Idea (named so after the merger between Vodafone and Idea in 2018) tremble with fear. Jio’s high speed data connection and its collection of data services at the lowest prices not only helped the company acquire the world’s largest subscriber base but also helped it gain a market share of 33.4%. Jio is said to go down in history as the “company that brought tens of millions of Indians online for the first time.”

Why are companies like Google, Facebook and other private equity, investment firms investing in Reliance Jio?

COVID-19 has undoubtedly been a tough time for most; however, Reliance Jio has been quite proactive during this period. It has been aggressively developing its expansion strategy, closing deals at an accelerated rate and has been positioning itself as the cornerstone of the Indian digital market. Jio’s comprehensive growth strategy poses as an attractive market for foreign investors as the company is trying to meet the digital needs of a population of 1.35 billion people, a feat only previously accomplished by countries like China. Having given recent times, this poses as a prolific opportunity for foreign investors who have been trying to vest their interests elsewhere.

Jio Platforms have raised more than $20.2 billion in the last four months by selling a stake in the firm, a much higher amount than the entire Indian start-up ecosystem raised in the last year.

In April, Facebook invested $5.7 billion for a 9.99% stake in the company. Facebook embodies its investment in India as pro-competitive, benefits consumers, “Kirana” stores (local, family-owned grocers) and other small microlocal Indian businesses. It hopes to take forward the vision of digital India. Facebook and Jio plan to empower over 60 million small businesses through its joint venture JioMart, between Reliance Jio Platforms and Reliance Retail (India’s largest retail chain), which will allow customers to pay and track their shipments through WhatsApp. This investment not only stands as a landmark for Jio but also supports Facebook in its quest to be a part of India’s digitisation.

Facebook’s investment triggered a chain of investments for Jio Platforms – Silver Lake (1.15%), Vista (2.32%), General Atlantic (1.34%), KKR (2.32%), Mubadala (1.85%), Silver Lake (0.93%), ADIA (1.16%), TPG (0.93%), L Catterton (0.39%), PIF (2.32%), Intel (2.32%), Qualcomm (0.15%) and Google (7.7%).

Google invested $4.5 billion for a 7.73% stake in Jio Platforms. This new investment from Google gives the firm an equity valuation of $58 billion. The two companies plan to work on a customised Android operating system that is to be used to develop low-cost, entry-level smartphones that will support Google Pay and a standard of future wireless 5G technology. Sundar Pichai recently announced his Google for India Digitisation Fund through which Google plans to invest about $10 billion in India over the next 5-7 years, which acts as a reflection of the firm’s confidence in the future of India and its digital economy. Google’s investment in Jio Platforms is definitely the first of many.

Jio Platforms already has a partnership with Microsoft for the expansion of the Azure cloud business and Office 365 in India. However, experts believe that Microsoft will soon declare an interest in Jio.

What are Reliance Jio’s plans for the future?

One of Jio’s main interest lies in its goal of bringing 5G technology to India. The firm recently expressed interest in acquiring or forming partnerships with domestic firms to develop competencies in building and manufacturing 5G products. This could also be in line with the Indian Government’s push for being “Atmanirbhar” (Self- Reliant). With current tensions regarding bans imposed on Huawei, a leading manufacturer of 5G equipment, it is believed that if Jio managed to become a 5G network manufacturer, it could leverage its competencies to deploy this technology across the world. This could allow Jio to be a world leader in the telecom sector.

Jio’s prospects regarding the establishment of JioMart along with Facebook’s WhatsApp will establish it as an e-commerce and e-grocery venture giant in a country where most retail activity takes place offline. One of the main focus of this venture would be to take “Kirana” stores (local, family-owned grocers) online by leveraging millions of WhatsApp users. Given the current circumstances, a successful establishment of this venture is predicted to have the power to take on rivals like Amazon, Walmart-backed Flipkart and Alibaba-backed Big Basket. However, although this has not been confirmed, recent developments suggest that Ambani’s Reliance Industries Ltd. is offering Amazon a rough $20 billion stake in its retail business.

Reliance Jio, now debt-free, has an immense number of initiatives in-store and is predicted to be a tech giant not only in the populous country of India but also in the world. This is denoted in the recent inflow of investments by world-leading firms into one that is only four years old. Ergo Durban, Co-CEO of technology investment firm Silver Lake believes that “Ambani made a huge bet on Jio. Now it is the world’s greatest private tech company hidden in plain sight.” Jio has a vision for India, a country where many still do not have access to smartphones or the latest data technologies; a vision to drive the digitalisation of the nation and ignite a new spark for innovation and growth. The company is seen as an opportunity; an opportunity presented to India through Reliance Jio to reach every single person located in the most remote corners of the nation and bring them online and up to speed with the latest data revolution. Reliance Jio’s latest chain of fundraising and investments is very exciting and the world is excited to see what comes next.

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