Reliance Jio has been enjoying one blockbuster month after another, it’s been 12 weeks and 13 big deals cracked. It all began with Facebook and then we had a bunch of equity players pouring in money like equity visa partners, Silverlake, Intel, Abu Dhabi based sovereign investors, and now the latest Qualcomm joins in the line.
Qualcomm has invested 730 crores for a 0.15 % in Jio platform. This is the 13th investment made in the Jio platform in less than three months. The Jio platform has raised 1.18 lakh crore for a 25.4 % stake from tech investors. This is the largest continuous fundraising by any company anywhere in the world. Ambitious plans are ahead for Jio going forward. This round of investments coming in and the high investments which have been attracted by Jio raises the question of what does Jio’s future looks like. The future of Reliance Jio looks optimistic because this deal is yet another milestone in what is now the largest fundraising exercise by a company anywhere in the world. And not to forget that these deals are back to back done in global lockdown, so that’s what makes this entire fundraising drive so impressive in terms of the fact that so much money has come in more than 1 lakh crore. Qualcomm is a world leader in wireless technology, the new size is comparatively smaller to some of the earlier deal which is 730 crore but what’s important is that it also joins two other strategic investors in reliance overview is Facebook the ‘social networking giant’ and Intel ‘the semiconductor giant’. The reason why this deal is important going ahead is that 5G is the future, and 5G and Qualcomm are almost synonymous with each other so going ahead reliance Jio will require the technological know-how of Qualcomm to efficiently roll out 5G infrastructure and services to its millions of customers and in Qualcomm’s point of view, they want to partner with the biggest telecom player and that is reliance Jio. So that’s how both sides look ahead and planned this deal that’s gonna benefit both parties.
It started with Facebook buying the 9.99% stake for rupees 43,500 crores in reliance Jio which was the first big investment. Followed by a 1.15% stake bought by silver lake partners for around 5,600 crores, then Vista equity partners came up with a 2.32% stake for more than 11,000 crore rupees. Then general Atlantic imported money at 1.43 % stake for rupees 6,500 crores. KKR added to a 2.32% stake for another rupee 11,300 crores and Abu Dhabi state fund Mubadala investment co, a sovereign investment company bought 1.85 % stake in Jio platforms for Rs. 9,03.60 crore. Intel Capital invested 1,894 crores for sharing 0.39% stake. And now recently joining the long run of high investors is Qualcomm. Qualcomm invested 730 crores in exchange of 0.15% stake and taking the telecom giants total investment to 1.18 lakh and up to 25.24 % stake sold in the Jio platform.
Why are big bucks coming in unprecedentedly?
It’s is unprecedented as we have never known or heard a telecom giant getting numbers like that. One reason is if we look at the ex competitors like BSNL and Vodafone, reliance Jio started only in 2016 and has up to 387 million subscribers which are a huge number and the highest followed by Airtel with 300 million customers. Even in terms of the number Jio has a population of more than the population of the United States of America. Another reason is Jio is not just a telecom carrier; it’s developing into an area of services while it’s already gone into many digital fields like Jio Giga Fiber, Jio cinema, Jio switch, Jio market, etc. The point Is, Jio is planning on creating a super app, something that Tencent did with China in 2011 through WeChat. They are trying to bring under the Jio platforms umbrella many apps together which includes utility services like Jio mart. Jio mart began recently in 200 towns of cities of India and this is the biggest ever launch for any online delivery service. So reliance is trying to get so many services an urban person might need under one app from shopping to entertainment which is attracting people’s interest in Jio. And hence the money is growing. This is a smartphone generation and post COVID 19 will bring more smartphone users with 600 million internet users, and as reliance plans to bring 5G network in India the deal with Qualcomm acts as an assurance for the executive of their plans and wonderful preparation and all of these factors make Jio platform great and that’s why the big money.
Mirroring the digital app WeChat, reliance plans to bring a super app in India. WeChat started as a chatting app, then little by little many features were added and now it has 1 billion programs within a single app. The story with WeChat was customized to China but what we will see with reliance will be the big drivers for India is the Jio marts. Reaching to 200 towns and cities, they are banking on their network of more than 11,000 retail stores and 50 warehouses spread across India and are also creating 300 to 500 smaller shops and stores to ensure last-mile delivery is sorted. So Jio platform will get a big push in e-commerce business. This is one but the second thing is the Giga fiber the Jio broadband services. With bundled up offer there are coming more customers. With 387 million subscribers, 500 retail stores, and the mini-program of apps within the app’s, Mukesh Ambani wants to bring online to the farmers of India. Hence this might be the digital enablers for selling goods in a wide range. Reliance has a great future ahead. This is India’s first super app in the making and probably the world’s first such open app because China is very restricted in terms of its access but on other hand reliance, the Jio platform might have a lot of services localized which is going to be an employment booster. And the best thing is that it’s not only going to be urban cities but it will also reach rural places making it more digitally inclusive.
A huge amount of equity capital has been created by reliance industries which also leads it to debt-free status and that’s the reason why most of the brokerages have been bullish about of Reliance industries, therefore the stock movements are seen. But one important aspect to note here is that with Qualcomm investment, even though it’s a small investment we must remember that the Jio platform is getting ready for 5G technology. With its deep technological advancements as well as the insights that Qualcomm ventures provide in the 5G play that is going to be a significant addition to the Jio platform moving forward.