India’s biggest multinational conglomerate, Reliance Industries seems to be ready for another game-changer after the success of its telecom arm Reliance Jio. The oil major, Reliance has filled its coffers with new investment funds to make Jio ‘debt-free’ and create a kitty of reserve for future projects. With the recent fundraising rally, the net worth of Reliance Industries Limited (RIL) chairman Mukesh Ambani has surpassed that of renowned investor Warren Buffet and Tesla founder, Elon Musk.
Reliance Jio was soft-launched in 2015 for testing and use within the corporate environment of RIL. It was made available to employees and partner service providers who tested the beta version. The operator services were made public on 5 September 2016, hence marking the start of Reliance Jio, India’s biggest cellular network operator. As of December 2019, Jio holds the biggest market share in cellular services pan India.
According to India’s richest man and RIL chairman Mukesh Ambani, Jio was the brainchild of his daughter Isha Ambani who complained of slow internet speed at their Mumbai residence. Jio started with the aim of acquiring big chunks of market share and giving data and voice call services at prices that were unimaginable.
Jio changed the way India lived. By offering free data and voice calls during the launch period, the telecom startup acquired its founding user base. It then partnered with various other service providers to give users more convenience in a single package. Existing service providers like Idea, Airtel, Vodafone, and the state-run BSNL were forced to change their pricing to give competition to Jio. The competition could be judged by the fact that two big cellular operators in India, namely, Idea and Vodafone had to merge their businesses to survive the Reliance Jio impact.
The company reported a net profit of USD311 million in Q4 FY 2019-20. The figure was just USD112 million a year ago during the same period. Jio’s yearly profit jumped 87% to USD742 million. Strong financials and profit margins even in a throat-cutting contentious line signals Jio’s strategy of making money by taking it out from their rival’s share.
Since its inception by patriarch Late Dhirubhai Ambani in 1966, Reliance Industries has always been a progressive firm that moves towards the future rather than holding itself in conservative ideas and business practices. New funding for Jio came at a time when the world was fighting Coronavirus pandemic. Defying all odds, the telecom giant has raised over USD20.2 billion between April and July 2020. The new funding will help it increase the money flow in existing lines and launch future devices.
Surprising the world, Reliance gathered investments from a number of companies. The diversified investment portfolio will help it advance in a number of matters. Its partnership with Google will work to make cheaper Android-based smartphones available for Indian consumers. On the other hand, Jio Platform can also work with blue-chip maker Intel or tech giant Qualcomm on a number of future projects.
●USD5.8 billion from Facebook
●USD4.5 billion from Google
●USD1.5 billion from KKR
●USD1.5 billion from Vista Equity Partners
●USD1.5 billion from PIF
●USD1.3 billion from Silver Lake Partners
●USD1.2 billion from Mubadala
●USD880 million from General Atlantic
●USD758 million from Abu Dhabi Investment Authority
●USD606 million from TPG
●USD253 million from L Catterton
RIL has also raised more than USD7 billion from a rights issue in what it said was the world’s largest rights issue by a non-financial company in the last ten years. The total amount raised by Reliance Industries roughly equals to 1% of India’s FY20 Nominal GDP. Funds raised by RIL through strategic investments are equal to about 40% of India’s total Foreign Direct Investment (FDI) flow in FY20.
India is and always will be the land of opportunities. With supply chains and manufacturing shifting from China, the world has its eyes on India. With its second-biggest population to provide an adequate workforce for the development of the globe, every commercial market has set a target in mind involving India, its cheap labour, and bountiful resources. Every global corporate wants to enter the Indian market to serve the population, which is apart of the huge demographic market itself. Facebook is reportedly facing hurdles making its WhatsApp Pay feature available in India due to regulatory difficulties. Google on the other is looking for new opportunities in hardware and OS game in India. Jio and Google have both separately tried to enter India’s low-cost phone market but their ventures flopped due to cumbersome red tape and resolutions.
With shared technology and expertise, Facebook, Google, and Jio are looking to make their products better and enter new markets. The added guidance and bestowed systems will give them opportunities in the new age technology sectors. Google and Facebook’s strong arrival in India can also be linked to the ongoing US-China trade stand-off wherein the American administration has asked departments to stop purchasing 5G equipment from China. India might be the only hope for global supply of 5G solutions if Jio’s tech partnerships turn successful.
Strategic partnership and funds from tech giants like Facebook, Google, Intel, & Qualcomm could help the company build a futuristic solution in India. JioGlass is one of the most innovative projects that RIL showcased in front of the world at a recent virtual event.
RIL has also introduced its idea for ‘Made in India’ 5G solutions. The company will work to make 5G hardware and handheld devices in India. It will promote Indian Prime Minister Narendra Modi’s call for ‘Atma Nirbhar Bharat’ or Self-Reliant India. Jio has also launched a multi-user video conferencing application called ‘JioMeet’ that challenges Zoom, Microsoft Teams, and Google Classrooms in the new normal amid Coronavirus. Several other projects have also been introduced by the company that could see momentum if new expertise is put into them.
Reliance and its future plans might pave the way for ‘future India’. The world witnesses these investment partnerships and speculates their potential for success. The big and the global vision strategy is giving the edge over all their competitors to Reliance Jio. We can just wait and watch as Reliance Jio makes its mark as an innovative solution provider while being firmly rooted in ground realities.
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