Jio carves out space for yet another US investor

It seems the US moneymen have a taste for Indian connectivity as General Atlantic becomes the fourth third-party firm to invest in the money-making machine which is Jio Platforms.

New York-based private equity firm General Atlantic has become the latest company to write a handsome $860 million cheque as table stakes for a 1.34% stake in Reliance Industries’ digital venture. Reliance Jio Platforms is looking like a very popular focal point for US investors attempting to tap into the rapidly developing Indian digital ecosystem.

In a matter of four weeks, Reliance Industries has managed to convince Facebook, Silver Lake, Vista Equity Partners and General Atlantic to part with almost $9 billion.

“I am thrilled to welcome General Atlantic, a marquee global investor, as a valued partner,” said Mukesh Ambani, Chairman of Reliance Industries. “I have known General Atlantic for several decades and greatly admired it for its belief in India’s growth potential.

“General Atlantic shares our vision of a Digital Society for India and strongly believes in the transformative power of digitization in enriching the lives of 1.3 billion Indians. We are excited to leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing for the benefit of Jio.”

While such warm words are usually offered irrelevant as to who the new investor is, General Atlantic is a useful company to have looped into the equation.

In the existing investment portfolio is NoBroker.com, an Indian consumer-to-consumer real estate transaction platform, Doctolib, digital healthcare platform in Europe to connect health professionals and patients, and Quizlet, an online learning platform. This is a company which has experience in the technology world, but also a number of bets which would be very complementary for the existing ventures in Reliance Jio Platforms.

“As long-term backers of global technology leaders and visionary entrepreneurs, we could not be more excited about investing in Jio,” said Bill Ford, CEO of General Atlantic.

“We share Mukesh’s conviction that digital connectivity has the potential to significantly accelerate the Indian economy and drive growth across the country. General Atlantic has a long track record working alongside founders to scale disruptive businesses, as Jio is doing at the forefront of the digital revolution in India.”

To call Jio disruptive is somewhat of an understatement, and the business model does seem to be drawing more attention from some very interesting organisations around the world. With the telco business unit as the tip of the spear, there is a clear opportunity to drive forward a secondary wave of digital businesses as connectivity get democratised through the country.

Doctolib, one of General Atlantic’s investments, is a very interesting platform for a country where traditional healthcare infrastructure is sporadic. The Jio digital ecosystem could act as a springboard for the app in the market, while Jio is then invested in another venture. Its collaboration and differentiation.

Reliance Jio, the telecoms business, is a powerful force, but the most interesting ideas are the ventures emerging today. The businesses which are enabled by the connectivity revolution which is sweeping the country. This is why the likes of General Atlantic are interested in invested in Reliance Jio Platforms now, not two years ago; the vision is much bigger than phone calls and streaming cat videos.


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Reliance Jio signs a third deal to add another $1.5bn to its bank account

Vista Equity Partners has become the third-largest investor in Reliance Platforms, purchasing a 2.32% equity stake in the disruptive business for $1.5 billion.

Following similar transactions with Facebook and Silver Lake, Vista will be become the third-largest investor in a business which is driving digital transformation and evolution in one of the worlds’ most attractive economies. Reliance Platforms, the business unit of Reliance Industries which incorporates all telecoms and digital ventures, is quickly becoming one of the worlds’ most interesting digital investments.

“We believe in the potential of the Digital Society that Jio is building for India,” said Robert Smith, CEO of Vista. “Mukesh’s vision as a global pioneer, alongside Jio’s world-class leadership team, have built a platform to scale and advance the data revolution it started.

“We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business and enterprise software to fuel the future of one of the world’s fastest growing digital economies.”

As Smith highlights, Reliance Platforms is more than a telco. Jio, the telecoms business unit, might be the disruptive force in India being used to democratise connectivity, but this is only one branch of the business. Following behind the telecom revolution, Reliance Platforms is attempting to encourage digital transformation programmes in SMEs, healthcare and entertainment, through digital currencies, streaming platforms and big data.

This is perhaps what is exciting international investors; Jio is so much more than a telecoms giant. The team has the vision to appreciate that telecoms is simply the foundation on which to build bigger things atop. This is the difference between a telco which will be relevant into the future, and one which is at risk of falling into the commoditised connectivity business model.

For example, with low-cost connectivity tariffs, more Indian consumers and SMEs are encouraged into the digital economy. A telco will make money by enabling this, but it is a utility with limited potential. Reliance Platforms is using this as a vehicle to enable alternative digital payment platforms in a joint venture with Facebook, to create growth revenue streams not just sustainable ones. The profits will be realised through the second wave of disruption.

It is realising connectivity is only the first step, a nuance which is not evident through the communications of other telcos. This vision is perhaps what is most interesting to investors.

“Like our other partners, Vista also shares with us the same vision of continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians,” said Mukesh Ambani, MD of Reliance Industries. “They believe in the transformative power of technology to be the key to an even better future for everyone.”

The business model which is slowly emerging out of Reliance Platforms is starting to look very exciting. Cut price and free voice tariffs might not make that much money, but they don’t have to if there is success in the secondary business models which are being enabled through the democratisation of connectivity.

This is the sort of business evolution which should be evident throughout the telecommunications industry but isn’t.

Jio is running riot again, but more synergies (sigh) are on the horizon

The Indian telecommunications industry might be crumbling around it, but Reliance Jio is still reaping the rewards of disruption and chaos, and there is much more to come.

Although the telco is now considered a staple of the Indian connectivity diet, it is easy to forget this is a company which is only five years old. This was not the first firm to emerge as a disruptive influence on the telco industry, but few could say they have enjoyed the rip-roaring success of Reliance Jio.

But most importantly, this might only be the tip of the iceberg, after all, this is only one business unit of a wider corporation.

“Our consumer businesses further strengthened their leadership positions and recorded robust growth on all operating and financial parameters during the year,” said Mukesh Ambani, Chairman and Managing Director of Reliance Industries.

“Both Retail and Jio, continue to work towards providing superior products and services to Indian consumers. We are fully committed on our investment plans in our consumer businesses and new initiatives.

“We are at the doorsteps of a huge opportunity and our rights issue and all other equity transactions will strengthen Reliance and position us to create substantial value for all our stakeholders.”

Reliance Jio results for financial year ending March 31 (USD ($), millions)
  Total Year-on-year
Total revenue 9,038 +40.7%
Profit 1,896 +63.5%
Subscribers 387.5 +26.3%

Source: Reliance Industries Investor Relations

With all the numbers heading in the right direction, you can see why Reliance Jio is an exciting business. Interestingly enough, not only are the total subscriber numbers shooting north, the team is also maintaining ARPU at roughly $1.73, while data usage is also increasing. There has been a surge of traffic on the network during the COVID-19 crisis as Indians are placed under lockdown orders, as much as a 50% increase on normality, but the network is holding steady.

These numbers are impressive, especially compared to the woes of competitors during this period, but Reliance Jio is still primarily a wireless business. Now it has established dominance in the mobile arena, the potential to lean into other areas is exciting. This means broadband and content, but also ventures into parallel industries.

It is a dreaded word, but there are synergies throughout the Reliance Industries portfolio.

The Reliance Industries business brought in revenues of roughly $87 billion through the last 12 months, with the business growing 5% year-on-year. The group has access to markets in 108 countries with operations in energy, petrochemicals, textiles, natural resources and retail, as well as telecoms.

Split of revenues by business unit for Reliance Industries (USD ($), millions)
Business unit Total revenue Year-on-year
Telecoms 9,038 +40.7%
Retail 21,510 +24.8%
Refining 51,159 -1.6%
Petrochemicals 19,177 -15.6%
Oil and Gas 423 -35.8%
Media 707 +4.7%

Every telco in the world wants to develop new products and services for enterprise customers and co-create new business ventures to marry connectivity and traditional business, while forward-looking enterprise organisations want to embrace connectivity. Cross-pollination within an existing corporation to meet these objectives creates a very exciting opportunity to Reliance Industries to become an industrial giant with connectivity at the core.

Part of this expansion into the novel and unknown is already being demonstrated with Reliance Jio’s partnership with Facebook.

In recent weeks, Facebook was announced a new investor in the digital business unit, taking a 9.9% stake for $5.7 billion. As part of this transaction, Facebook entered into a partnership with the digital and retail business units to create a digital payments platform, with WhatsApp playing a significant role, for a society which largely lacks traditional banking infrastructure.

This is a new venture for Reliance Industries, bringing in a third-party to help bridge the gap between two already successful business units. Many people talk about innovation, but this is a genuine example, creating new revenues without cannibalising existing units with the help of an industry partner. It is a case of 1+1+1=4.

As you can see from the image above, Reliance Jio is much more than a telecoms company nowadays. It is spreading its wings to various different technologies, segments and concepts, all of which can be developed into different revenue streams. This creates a significant amount of diversification in the TMT segments, but when combined with the different units of the Reliance Industries parent company it creates almost countless new opportunities.

Reliance Jio has been a very interesting company to keep an eye on over the last few years, but with the gaps between business units being bridged, and the eclectic mix of existing ventures, the opportunities for the wider Reliance Industries are very exciting.