Mukesh Ambani’s next bet on Jio

Mukesh Ambani’s next bet on Jio: RIL to invest 20,000 into Reliance Jio Infocomm

 Reliance Jio Infocomm Ltd (RJIL), Mukesh Ambani-controlled disruptive telecom venture, has been on a growing spree since its launch in 2016. Jio had registered a gain of 65 per cent in the recently concluded quarter (January-March) of the financial year 2018-2019. Reliance Jio, with a subscriber base of about 307 million customers as of April 2019, is now seemingly gearing up for the 5G spectrum allocation, expansion of its broadband services and foray into the e-commerce space.

According to a report in Mint, Reliance Industries Ltd (RIL) is likely to invest a sum of Rs 20,000 crore in its telecom arm Reliance Jio Infocomm Ltd in order to boost its position amid the broadband and e-commerce market and substantiating the launch of its 5G services. 

Jio might issue as much as “4 billion non-cumulative optionally convertible preference shares” to the parent firm Reliance Industries at Rs 50 per share for cash, Mint report said citing unnamed people aware of the matter, adding, the shares will carry an interest rate of 9 per cent. 

“Jio 4G LTE network would soon cover every district, taluk, gram panchayat and village of India with targeted population coverage of 99 per cent,” Mukesh Ambani said while announcing the Q4 and FY19 financial results of the oil-to-textile-to-telecom conglomerate Reliance Industries Ltd. 

Interestingly, Reliance Jio has the lowest churn rate in the telecom industry which stands at 0.75 per cent per month, the company said in a regulatory filing. As of March 2019, Jio is the second-largest telecom service provider in India according to revenue market share (RMS) of 31.7 per cent. Vodafone Idea with an RMS of 32.2 per cent stands on first place, whereas, the age-old telecom giant Bharti Airtel has slipped to third place with an RMS of 27.3 per cent following the rapid growth of Jio and amalgamation of Vodafone India and Idea Cellular Ltd.

Jio’s Growth And The Ecommerce Market

The 2019 Mary Meeker report on Internet Trends has noted Jio as one of the most innovative internet companies based outside the US. The report has focussed on how the company has been trying to expand into hybrid ecommerce by offering a digital shopping experience and connecting customers at thousands of Jio retail stores around the country. The report also added that the company’s offering of free voice call and cheap data plans have helped double data usage in a year — back in 2016, the company had set a record by attracting 16 Mn subscribers in the first month of its launch.

“We are creating a hybrid, online-to-offline commerce platform by integrating Reliance Retail’s physical marketplace with Jio’s digital infrastructure and services.” Reliance’s chairman Mukesh Ambani had said about its approach to ecommerce.

Presently, the Indian ecommerce market is largely dominated by global ecommerce major Amazon and Walmart-owned Flipkart.

Reliance has also been looking at expanding its operations in India’s fintech sector by introducing Point of Sale (PoS) devices for retail outlets. This could also be part of the company’s ecommerce offering. The company is partnering with Hindustan Unilever to acquire merchants on its platform.