This Indian Billionaire is Quietly Building his own Big Tech Company
The Fifth-Richest human in the world has even higher ambitions.
Mukesh Ambani’s Reliance has raised a series of investments totalling approximately $20 Billion for Jio Platforms and is expanding the oil-to-retail-to-telecommunications conglomerate’s foothold into the lucrative technology sector.
The Story
On April 23rd, the world woke up to the news of Facebook’s acquisition of a minority stake in Jio Platforms, the Reliance subsidiary that owns the telecom giant Jio Infocom and Reliance’s entire arsenal of other digital services. Earlier, it was touted as a part of Mukesh Ambani’s goal to make Reliance Industries net-debt free, however, as time progressed, I realised that the real game is much, much bigger.
Less than two months later, I saw that becoming net-debt free is not Ambani’s only goal. The talking point is not the investments but rather the investors.
Let’s recap what has happened in the previous hundred days.
From April’s Facebook announcement to a day before Reliance’s annual general meeting on July 15th, Ambani’s Jio raised a mammoth $16 Billion through 12 rounds of investment, with several technology companies such as Facebook, Intel, Qualcomm and more being minority investors. Through this series of deals, Reliance would have been diluting approximately 25% of its ownership in Jio Platforms.
But then, on the big day, July 15th, Ambani made another headline-worthy announcement for Jio at Reliance’s AGM — Google would be investing another $4.5 Billion for a ~7.73% stake in the company.
Here, we see that Reliance is not only looking for capital to pay off its debts, but also a subtle hint of Mukesh Ambani’s gargantuan ambitions in the tech sector. In fact, in addition to many of the technology companies that have invested in the venture, many of its PE investors are also tech-focused. Case in points here being Silverlake, TPG and KKR, among others, that have investments in several technology startups such as AirBnB, Waymo (the company that wants to make self-driving cars a reality!), Seagate, ByteDance (TikTok’s parent) and much more.
This ignites a very significant question, why are these global tech investors putting money into Jio? Do they see Jio as merely a telecom player or also a potential technology giant?
A look into Reliance’s investor presentation gives us the answers.
When these investors buy a stake in Jio Platforms, they are not only buying into its telecom business but also its digital ventures.
Ambani’s Technology Ambitions
Payments
Just recently, Jio announced its own UPI ID which would be available across major Indian cities, through this, Reliance wants to enter the payments market of our country, which is extremely vast, owing to India’s large smartphone using population. Ambani has long followed the principle of vertical integration in all of Reliance’s businesses, whether it was in Oil & Gas, where the giant is present in exploration, refinery as well as marketing, or telecom, where it built a lot of greenfield optic-fibre infrastructure for internet services deployment. In a similar fashion, this UPI ID could later be connected to Jio’s Payments Bank, launched in 2018.
If we go back a little further, we see that JioPay is just the tip of the iceberg. Jio’s list of current and future products is endless.
OTT Streaming
Jio has rigorously expanded into media. It owns Saavn, a music streaming app, has its own digital TV and Cinema service, owns stake in AltBalaji and Eros International, and is planning to bring the “First Day First Show” concept to homes through phones, an experience that was previously limited to physical cinema halls. Entertainment consumption in India is led by Bollywood and other smaller movie industries + DTH TV channels; with JioMovies, and a soon-to-be-launched masterstroke, Jio has plans to capture both.
Here’s the aforementioned masterstroke — Jio TV+, a platform announced on its recent AGM on July 15th which aggregates content of multiple streaming services and smart TV apps and brings them directly to India’s TVs, which would feature Jio’s own partner/licenced content as well as content from several other streaming apps. Moreover, JioTV+ would also be supported through Jio’s own DTH TV set-top box, which would convert any non-smart TV into a screen which can play several streaming services such as Prime Video, Netflix, Hotstar (Disney+) etc.
This strategy to reach the people’s eyes through their smartphones/laptops/smart TVs, as well as regular non-smart TVs, could be a key differentiator in enabling Jio to capture the bulk of India’s OTT potential, since most of the Indian households still use non-smart TVs. An ambitious first-mover advantage move. While FAANG’s OTT services are still finding their way into the country’s vast market, Jio has already become a household name and is sitting on a war-chest of accessible and likeable content, with adequate pipelines to supply it.
Gaming
Jio is also entering into India’s smartphone gaming space with JioGames. For your casual gaming needs, it lets you play countless games on your smartphone without having to download them, all through the MyJio as well as JioGames apps. Gaming in India has seen a recent boom, with local gamers launching their own streaming channels on YouTube and Twitch. My bet is that Jio will soon enter the streaming space as well, its ubiquitous presence in the market can always be leveraged.
Miscellaneous — Followed by an Amalgamation into One
The list of consumer-facing digital products of Jio is endless. From JioSecurity for protecting your phone from malware to JioGate for home security, from JioThings for B2B location tracking services to JioHealthHub for online consultation with doctors, it has products for all users. It has JioNews, JioCall, JioChat, JioBrowser and many upcoming services that not only give Reliance multiple streams of income but also connect you to its overall platform and gives it a sense of the mass user behaviour. Smart.
If we look closely, Ambani is trying to build India’s go-to Super App. That is one app, for all your needs.
Bored at home? Open your MyJio app. Stream movies and music, get the latest news, play games with your friends, chat with them and buy Jio’s mobile data plans, of course, through JioPay. One app, multiple uses.
There’s More — Cloud
Then there’s JioCloud, a competitor to Google Drive, to introduce its customers to cloud storage. An interesting factoid here is that Reliance already has a functioning Memorandum of Understanding with Microsoft, specifically pertaining to Cloud Services. Through JioCloud, Ambani wants a piece of India’s vast cloud storage potential, led by a surge in data consumption as well as smartphone penetration. He has also been vocal about the country’s large untapped enterprise cloud market.
There’s Even More — eCommerce
There’s even more. Through Reliance Retail (which is another segment of Reliance Industries) which owns thousands of fashion, electronics and FMCG stores across the country, Ambani is also focusing on the eCommerce market. JioMart’s app is already here for FMCG goods, with 1 million+ downloads in just a few days and counting, and will soon be operational on your WhatsApp too, with gradual product expansions. Think each Kirana (local) store as an individual eCommerce business, through Reliance’s technology. This is disruptive because unlike the West’s organised retail sector, the majority of the Indian retail happens in an unorganised manner, through mom & pop stores. Empowering them through a platform supported by a robust logistics network can potentially create a humongous plug-n-play eCommerce behemoth.
While other eCommerce players need you to download their apps, create accounts and upload your details, a long process, Reliance will have millions of ready-to-use users, through WhatsApp. Smooth, efficient, elegant. A massive opportunity.
There are rumours that Amazon might invest in Reliance Retail to acquire a minority stake like Facebook & Google did in the Reliance Jio Platforms.
Expansion into the above segments would mean even greater opportunities for vertical integration, since Reliance Retail runs its own multi-brand fashion retail chain called Reliance Trends, a multi-brand electronics retail chain called Reliance Digital, and has the franchises of several international fashion brands in India.
Let’s not forget that much of Jio’s 390 million subscribers come from tier 2 or 3 cities, and perhaps even from rural India, who are already aware of the Jio brand name. Reliance is leveraging this vast smartphone using market of the Indian heartland to gain the market share of the bottom of the pyramid.
5G & Telecom — The Vertically Integrated Backbone of the Future
At its Annual General Meeting, Reliance expressed intentions to bring 5G to India. Not only that, it is also claiming to have created its own 5G technology solutions which can help other telecom firms get support-infrastructure for launching their own 5G services. Ambani said that once Jio’s 5G is deployed in India, this 5G technology will be offered to other countries’ telecom firms as a service. While more details on this front are awaited, it seems likely that this will be a competitor to the infamous Chinese companies Huawei and ZTE.
Moreover, it is predicted that Jio’s market share in the telecom segment will rise to approximately 50% by 2025. With India’s market size, 50% equals unparalleled scale. This prediction will be realised by Jio’s entry into the feature-phone OS segment. Currently, a significant portion of the Indian phone market is dominated by Feature Phones, meaning Jio’s 4G services cannot have inroads there. However, with Google onboard, Ambani is planning to make a smart-feature phone for the masses at the bottom of India’s pyramid. If this play is successful, Jio will have a near-dominance on the Indian market.
Understanding all Investments — Including Outbound
Jio has not only brought strategic investors on board, but it has also acquired a stake in strategic companies.
It acquired Haptik, an AI service provider for businesses, Embibe, an AI-based eLearning company, Netradyne, an AI software startup focused on fleet management, Tesseract, a VR/AR startup and Asteria Aerospace, a drone maker, among many more. At a later stage, Jio wants to be a company with significant interests in Big Data, Internet of Things, Analytics, Automation and all things digital.
These investments seem to be bearing fruit. At its AGM on July 15th, which in fact, was conducted virtually through Jio’s video conferencing play JioMeet, Reliance announced its entry into the smart glass market too, with, you guessed it, JioGlass. It is envisaged as a VR product focused on giving the masses easy access to information, and also solidify Jio’s entry into the EdTech.
While smart-glass as a product has historically not been successful, it is interesting to see a company take a fresh shot at it.
As I said, the list is endless.
Telecom is not enough. Ambani wants Reliance to be India’s first Big Tech company, and he wants to do it through Jio. With interests in communications, payments, B2B services, eCommerce, OTT media, gaming and cloud, there lies a colossal scope for value creation. From JioLearning to JioHome, he wants to reimagine the way digitization touches India.
This barrage of investments, announcements and launches has set Reliance’s stock price to soaring heights. Since its Covid-19 induced crash in March, the stock has risen approximately 200%, an enviable rally for Indian large-caps. This has made Ambani the fifth richest human in the world, surpassing Elon Musk, Larry Ellison, Larry Page, Sergey Brin and Warren Buffet.
Okay, let’s take a breath now. The digital market has potential and Reliance wants to tap a lot of it. But, when dreams seem too optimistic or too good to be true, is achieving them easy? More products mean more competitors and more challenges. Time will answer us, but Reliance definitely has ambitions beyond Telecom.
