The year 2020 has been a forgettable one for most. But for Mukesh Ambani, it has been the best. Nearly 20 years after Reliance Industries first got into the telecom business, it has emerged at the top. Jio has now raised $20 billion by selling minority stakes to a raft of marquee global names — including Facebook, Google, and Intel. The man deserves 10/10 for a 20:20 vision.
In January 2020, Jio managed to achieve what had been considered impossible in the telecom industry. In just a little over three years after launch, Jio left behind Vodafone Idea and Bharti Airtel to become the number one telecom company in India. The pecking order had been altered. When it had launched in 2016, no one had quite expected that the industry could see the tables overturned so soon. There was not much to celebrate for Jio and it has only gone about with business as usual.
When Vodafone India and Idea Cellular joined hands in August 2018, the merged entity had 408 million subscribers. It has taken the Reliancebehemoth just over 12 months to wrest subscribers and dethrone the leader. Becoming number one has only made Jio’s ambitions bolder.
Version 1.0 of its playbook had been executed to perfection.
The success in dominating the telecom sector did not come soon enough, and it even tested the RIL Chairman’s patience. It had taken two attempts, spread over two decades, for Reliance to dominate the industry. When it had made the first attempt, the two Ambani brothers — Anil and Mukesh —were together.
Reliance Communication had caught the imagination when the telecom sector was opening up, a little after the New Telecom Policy took effect in August 1999. Its ‘Monsoon Hungama’ scheme – unlimited calls for Rs 501 on its own network – resonated with the masses like never before. When they formally announced the split in mid-2005, the telecom business, Reliance Communication, was handed over to the younger Ambani. After having well over 100 million subscribers in 2010, the business filed for bankruptcy this year.
Meanwhile, Mukesh Ambani-owned Reliance Industries was already laying down the groundwork for its telecom future. When Infotel Broadband won the licence for all 22 circles in 2010, it paid Rs 4,800 crore and bought out the company.
Crafting the digital dream
Now, it was time to unleash version 2.0.
From dominating an industry, Reliance is now building a platform that could become the place to do business in the near future. Enabling the purchase of a whole host of products and services for its 400 million subscribers could be the obvious first choice.
Connecting the small mom-and-pop stores to larger retail chains is part of the next step. Multiply the idea across various industries – healthcare, education, entertainment, gaming and others – and the gargantuan scale becomes clear.
For telecom subscribers, India’s top three players are used to an average revenue per user of about $2 per month. Jio, too, has been averaging around the industry standard. Adding an e-commerce layer for its subscribers could dramatically improve that number and increase the gap with its competitors.
Since Mark Zuckerberg-led Facebook has invested in Jio Platforms, the choice of WhatsApp Pay for customers’ transactions would be an obvious choice. Each transaction could further add a sliver to its earnings.
Connecting its subscribers to its 12,000 retail stores across India could create a vertically integrated business, driving the Reliance-owned economy further. Little wonder, the idea caught the imagination of big bulge investors, companies such as Facebook and Google and the Saudi Arabia sovereign wealth fund, even while the world was battling the coronavirus pandemic.
According to a report by Bloomberg, with almost the first half of 2020 over, Jio Platforms has managed to corner over half the amount spent on telecom deals around the world. Since the Bloomberg report, it has sold more stake to marquee global names, and the company is now valued at nearly $60 billion.
The $20 billion cash from the sale of equity valuation is already in the bank. If the Reliance deal with Aramco for a stake sale in the oil business goes through, another $15 billion could add to it. With that bazooka, taking on its two biggest rivals – Walmart-owned Flipkart and Amazon – could be just a little easier.
Capturing the next frontier
If version 1.0 was about dominating an industry and version 2.0 about creating a new business platform, 3.0 could give wings to Reliance’s global ambitions. The seeds could be sown with a ubiquitous digital platform.
RIL Chairman Mukesh Ambani announced that Jio was developing 5G solutions from scratch, well before services have been launched in India. He has made it clear that these solutions could be provided to other telecom companies around the world.
Offering cloud-based services, licensing technology and technology services, driving e-commerce and expanding the footprint could just be the beginning. Africa could be a logical place to dominate since the industry in most countries is relatively unorganised. The continent is seen by many as the next frontier for business.
Payments could be a globally scalable business. In the absence of regulatory clearances, Facebook-owned WhatsApp Pay in India is still in a testing phase, capped at one million users. When it gets clearance from the Reserve Bank of India, WhatsApp’s 400 million subscribers could help make mobile phone payments a breeze. Once it has been perfected, that template can be taken to other parts of the world.
With its scale in India, Jio’s e-commerce ambitions could lead it to new global destinations. Adding a payment layer to other businesses, in partnership with WhatsApp, could be just a part of that plan.
Everyone’s buying into the Jio dream for now. Big bulge investors are writing a cheque to own a slice of it. The modest ones are using its services to drive their lives and businesses.
The author has been a business journalist, having tracked markets & economy across print & television media. Views are personal.
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