AFTER INVESTMENTS by a clutch of global tech giants including Facebook, Google has signed up with Jio Platforms, the digital subsidiary of Reliance Industries Ltd (RIL), to invest Rs 33,737 crore (or approximately $4.5 billion) for a 7.7 per cent stake. The strategic deal would likely lead to unveiling of new technology products and solutions in India.
Making a string of announcements in the digital and telecom market at the company’s virtual annual general meeting (AGM), RIL Chairman Mukesh Ambani said Jio has designed and developed a complete 5G solution that’s ready for launch as soon as spectrum is made available next year.
Jio and Google have also entered into a commercial agreement to jointly develop an entry-level affordable smartphone with optimisations to the Android operating system and the Play Store, Ambani said. On Monday, Google said it has committed $10 billion investment in India in the next 5-7 years for empowering small businesses and building products suited to the country’s needs.
“The pace and scale of digital transformation in India is hugely inspiring for us and reinforces our view that building products for India first helps us build better products for users everywhere,” Sundar Pichai, CEO of Google and Alphabet, said in his message to the shareholders at the AGM.
“We believe we can design an entry-level 4G… or even 5G smartphone for a fraction of its current cost,” Ambani said while announcing Google’s investments.
RIL Chairman said its 5G technology was developed “using 100 per cent home grown technologies and solutions”. “This Made-in-India 5G solution will be ready for trials as soon as 5G spectrum is available… and can be ready for field deployment next year.”
Ambani said the 4G network can easily be upgraded to 5G because of Jio’s converged, all-IP network architecture. “Once Jio’s 5G solution is proven at India-scale, Jio Platforms would be well positioned to be an exporter of 5G solutions to other telecom operators globally, as a complete managed service,” he said.
He also announced RIL’s oil-to-chemical (O2C) business will be hived off into a separate subsidiary to facilitate an equity partnership opportunity with Saudi Aramco, which is in the works.
However, Ambani didn’t make any specific announcement about listing its retail arm and Jio Platforms but indicated he is looking for equity tie-ups with global players for the retail arm. “We have received strong interest from strategic and financial investors in Reliance Retail. We will induct global partners and investors in Reliance Retail in the next few quarters,” he said.
The investment by Google values Jio Platforms at Rs 4.36 lakh crore. With this, the total investment from financial and strategic investors into Jio Platforms stands at Rs 1,52,056 crore. The investment, RIL said, will build on Jio’s and Google’s existing efforts to expand the benefits of digitisation across the length and breadth of India, beyond the current 500 plus million Internet users.
RIL has raised a total of Rs 2,12,809 crore through a rights issue, the combined investments in Jio Platforms and investment by BP. “This is unprecedented in the history of capital markets in India. This capital raise is significantly in excess of our net debt of Rs 1,61,035 crore at the end of FY19-20,” he said.
“Reliance is now truly a zero net debt company, well ahead of my goal of March 2021,” Ambani said. He indicated that Jio would collaborate with the partners to bring out new solutions and technology. “We will work with them to develop new products for India and Indians. I look forward to working with each of them in a collaborative way to build on Jio Platforms’ portfolio of technology and solutions,” he said.
At the AGM event, Facebook CEO Mark Zuckerberg said, “We’re committing to work together on some critical projects that we think will open up a lot of opportunities for commerce in India. India is a special place for us, it’s home to the largest communities around the world on Facebook and WhatsApp, and there are a lot of talented entrepreneurs.” Facebook acquired a 9.9 per cent stake in Jio for Rs 43,574 crore in May this year.
On the Saudi Aramco deal, Ambani said the deal has not progressed as per the original timeline due to unforeseen circumstances in the energy market and the Covid-19 situation. “Our equity requirements have already been met. We will approach NCLT with our proposal to spin off our O2C business into a separate subsidiary to facilitate this partnership. We expect to complete this process by early 2021,” he said.
Jio Platforms, a majority-owned subsidiary of Reliance Industries, has made significant investments across its digital ecosystem, powered by leading technologies spanning broadband connectivity, smart devices, cloud and edge computing, big data analytics, artificial intelligence, Internet of Things, augmented and mixed reality and blockchain.
RIL shares on Wednesday fell 3.71 per cent to Rs 1,845.60 on the stock exchanges due to profit-taking after the AGM announcements.
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