Even though the coronavirus pandemic created havoc across the globe, disrupting almost every business unit, one company that is taking full advantage of the present situation is nce Jio. After a robust performance in the Indian telecom space, the company is now repositioning itself in the global technology space backed by a slew of foreign investments, who are increasingly finding Reliance Jio’s technology platform – Jio Platforms – highly lucrative.
The recent investment by US-based private equity firm General Atlantic to the tune of $870 million in the company and acquiring a 1% stake, illustrates its growing stature not only in the burgeoning Indian technology space, but also elevates India’s position in the global technology landscape.
From telco to the tech space
Reliance Jio and its investments in India, particularly in the telecom space, have changed the very dynamics of the industry. Needless to mention, the launch of its Jio Mobile data plans that offered free 4G for the first six months of its operation in 2016 helped shape a digital revolution in the country, with Indian customers consuming about 3x the amount of data of an average European user.
Jio is currently present in the broadband space, smart devices, cloud and edge computing, Big Data analytics, artificial intelligence, IoT, Augmented and Mixed Reality as well as blockchain.
The conglomerate has raised around $9 billion over the last month by selling stakes to big investors, including Facebook, Silver Lake, and now General Atlantic, according to data and analytics company GlobalData.
Facebook bought a 10% stake in Reliance Jio at $5.7 billion deal. The second big investment came from Silver Lake which bought a 1 % stake. This was followed by US-based Vista Equity Partners, which bought a 2% stake in Jio Platforms. The money invested by Facebook and Silver Lake will help the company achieve what it calls a Digital India vision for 1.3 billion people and businesses across the country, including small businesses, micro-businesses and farmers.
For example, the Facebook deal gives Jio Platforms access to WhatsApp as the platform for pushing JioMart, its digital commerce platform. With the phenomenal rise of WhatsApp users in India, the vision for this project is to bring the nearby stores to consumers on WhatsApp. And there are millions of these small merchants and Kirana stores across the country.
This also fits in perfectly with the Government of India’s push for digital payments, and particularly mobile payment, as part of the Digital India mission. Experts believe, foreign players in these segments, including Amazon, Alibaba’s Paytm, and Walmart’s Flipkart, will need to carefully watch this dangerous alliance.
Silver Lake too clearly sees value in Jio Platforms as an emerging serious tech company, and the technology as well as services that Jio Platforms already has, or plans to invest in. JioMeet is one example, and so are the potential volumes that JioMart could generate on WhatsApp. It further boosts the broadband space in India, with the COVID pandemic ensuring a significant change in work culture.
Gain in the time of COVID-19
Laura Petrone, Senior Analyst at GlobalData places Reliance Jio along with Amazon and Netflix that are leading the COVID-19 theme, which allows them to capitalize on their strong position in ecommerce and video streaming.
“COVID-19 will accelerate Reliance’s move into India’s market for Internet services, like e-commerce and video streaming, as data traffic and online sales have expanded during the lockdown,” she said.
Reliance which spent tens of billions of dollars building out Jio now needs to pay off its debts. The new investments will allow the conglomerate to focus on the digital part of the business, which is the most promising. While the oil refining business still accounts for the bulk of the company’s revenues, it has been hit hard by the fall in oil prices and demand.
“With General Atlantic, Jio Platforms further gets sound asset investors, who have been known to single out major technology players across the globe. Going forward, Jio Platforms can play a critical new role in shaping India’s technological landscape, much like the way it did in the telecom industry with Reliance Jio’s mobile data revolution,” Petrone summed up.