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.

DoJ ready to greenlight Sprint/T-Mobile US merger – report

It has been one of the most protracted merger approval processes in recent memories, but source close to the US Department of Justice believe a positive decision is on the horizon for Sprint and T-Mobile US.

With Dish seemingly waiting in the wings to purchase Sprint’s prepaid brand Boost, the Department of Justice might well be on the verge of approving the $26 billion merger. According to the Wall Street Journal, a decision could be made public this week, though the budding duo would still have to face legal challenges from several State Attorney General’s before experiencing the merger euphoria.

After months of regulatory and antitrust objections to the deal, the Department of Justice might well be finally convinced. Aside from off-loading Boost to create a fourth nationwide player in the US, the duo would also have to commit to a three-year roadmap for 5G deployment as well as promising no tariff increases during the period.

Originally it did appear the Department of Justice did not share the enthusiasm as the FCC for the deal, though this report seemingly demonstrates somewhat of a U-turn. What is worth noting is all of these reports and rumours are nothing more than hearsay, though it will be welcome news from the T-Mobile US and Sprint executives who have been fighting against the tide for months.

That said, the deal with Dish appears to be central to this approval.

Earlier this week, it was suggested Dish had come to an agreement with Sprint to purchase the Boost brand for $5 billion. As part of the deal, Dish would become a connectivity customer of the newly merged business as it constructed its own network.

This would appear to be a very sensible report as Dish is under pressure to make use of the spectrum assets it has been collected over the last few years. Deadline day is quickly approaching for Dish to demonstrate it will make use of the licences otherwise it would be forced to hand back the valuable assets.

Hopefully the end of this saga is close as any further delays could start to have detrimental impacts on the 5G rollout plans of the two separate organizations. Both T-Mobile US and Sprint are keen to link up as this would create a more consolidated challenge to the leadership position of AT&T and Verizon in the mobile segment.

That said, objections from various parties have suggested reducing the number of nationwide MNOs from three to four would negatively impact competition, while others have also pointed to recent market trends.

In a joint lawsuit against the merger, several State Attorney Generals have pointed to decreasing prices for mobile contracts over the last few years, arguing that the system works. Some might suggest fixing something which isn’t broken is not the best path; if the current level of competition is benefitting the consumer, why should anyone consider changing it.

These reports are nothing more than rumour for the moment, and there are the lawsuits to consider, but it does appear this prolonged saga might be coming to a close sooner rather than later.

Vodafone gets the green light from Europe for Liberty Global acquisition

The European Commission has given the all-clear for Vodafone’s €18.4 billion acquisition of Liberty Global’s cable operations in Germany, Hungary, Czech Republic and Romania.

There are of course conditions which Vodafone will have to adhere to, but the telco is now claiming to be Europe’s largest converged operator, with 116.3 million mobile customers, 24.2 million broadband customers and 22.1 million TV customers across 13 European countries.

“With the European Commission’s approval of this transaction, Vodafone transforms into Europe’s largest fully-converged communications operator, accelerating innovation through our gigabit networks and bringing greater benefits to millions of customers in Germany, the Czech Republic, Hungary and Romania,” said Vodafone Group CEO Nick Reid.

“This is a significant step toward enabling truly digital societies for our customers.”

Of course, Vodafone has not got it all its own way. One of the concessions relates to the German market where Vodafone has agreed to open up the cable network to Telefonica Deutschland, allowing the rival to deliver TV and broadband services. Telefonica Deutschland has been discussing ways in which it can enter into new service segments, though this concession will certainly be welcomed by the bean-counters.

On the broadcasting side, Vodafone has also agreed it will not restrict broadcasters from distributing their content also via OTT services. This concession has been designed to counter fears that the newly merged entity would inhibit the growth of OTT services across the various geographies.

Following the approval, Vodafone expects the transaction to be completed by 31 July, though not everyone will be happy with the deal.

Yesterday, credit rating agency S&P entered Vodafone onto its CreditWatch list in a negative capacity, suggesting the firm has been too adventurous on its recent spending spree. This acquisition is deemed as a significant outlay, though the firm is also exposed to several spectrum auctions in key markets, as well as operating in some areas where trading conditions are less than perfect. S&P has said it will downgrade Vodafone to BBB on approval of the deal.

Elsewhere, other analysts have been pointing to negative performance in the stock markets since the introduction of Reid as CEO and the announcement of the Liberty Global transaction. Since these two news snippets hit the headlines, Vodafone’s share price has declined by more than 30%. Vodafone might be more competitive in some European markets now, but it seems some are worried by the financial commitments.

Four more States stand in the way of Sprint/T-Mobile merger

With each week that passes, it seems to be getting more and more difficult for Sprint and T-Mobile US. Now, four State Attorney Generals have attempted to block the move.

Officially, the 180-day stop-clock which the FCC gives itself to approve any industry transactions has hit 202, and that doesn’t include the ‘pause’ it gave itself. And while the FCC might be taking things at a leisurely pace, it seems the Attorney General Offices around the US are building up a head-of-steam.

Two weeks ago, New York Attorney General Letitia James launched her campaign against the merger, questioning the logic and evidence used to promote the promises of increased competition, a faster 5G rollout or cheaper tariffs across the country. And she seems to have stuck a chord with counterparts in numerous other states.

Initially, James had the support of nine states, but with Hawaii, Massachusetts, Minnesota, and Nevada adding themselves to the suit, the total number of states as plaintiffs is now fourteen.

“The merger of T-Mobile and Sprint would stifle competition, cut jobs, and harm vulnerable consumers from across the country, so unity among the states will be key in defending our citizens against this power-hungry corporate union,” James said.

“We welcome the support from these four additional states, which should serve as a reminder that, all throughout the nation, we have much to lose if we do not take action to protect our people from this megamerger.”

And while this might look bad enough for Sprint and T-Mobile executives, it could get a lot worse. Over the last couple of weeks, letters have been submitted from an additional six Attorney Generals, telling the FCC investigations have begun to check the legality of the merger. Those states yet to declare are Pennsylvania (letter submitted June 5), Arizona (June 5), Delaware (June 18), Nebraska (June 18), Indiana (June 20) and Texas (June 21).

What is worth noting is that there does seem to be somewhat of a political split in in terms of objections here. All of the 14 Attorney Generals who have joined the suit so far are sitting in the Democrat camp. Of the six who are currently conducting investigations, two more are Democrat (Delaware and Pennsylvania) while four sit in the opposing Republican party (Texas, Indiana, Nebraska and Arizona).

Massachusetts Attorney General Maura Healey is objecting on the grounds of reduced competition, Minnesota AG Keith Ellison is attempting to protect jobs and lower prices, Hawaii’s AG Clare Connors didn’t say anything, and Nevada AG Aaron Ford simply said nothing of genuine value.

The most common theme with these objections seems to be focused on the idea of competition. Although T-Mobile and Sprint argue there is a need for more competition in the market, the AGs don’t seem to think so, or at least this isn’t the way to go about it. T-Mobile CEO John Legere might condemn the ‘duopoly’ which has formed at the head of the telco rankings, however the numbers do not lie.

Coverage is increasing, ARPU is coming down and the US should have all four of the major MNOs in the 5G world before the vast majority of other nations around the world. Things could be better in this market of course, but the trends seem to be heading in the right direction. This is a point which has been raised by the AGs; if it isn’t broken, don’t try and fix it.

Unfortunately for Sprint and T-Mobile, the argument of decreasing the number of telcos to increase competition flies in the face of logic, especially when you are removing the two cheapest options from the market. Of course, telecommunications is a capital-intensive segment to operate in, scale is very important, as is access to more valuable spectrum. But, the general consensus in the telco world is more providers is a better approach not less.

There will of course be incredibly loud voices on both sides of the argument, but logic lies with the AGs here. This is not to say the FCC will agree, but overarching trends argue against the need for Sprint and T-Mobile to merge.

Nerves jangle as Aussies delay TPG/Vodafone merger decision

The Australian regulator has pushed back the deadline for its decision on whether Vodafone Australia and TPG can move forward with the proposed £8.2 billion merger.

While this far from a definite sign the merger will be blocked by the watchdog, the longer the evaluation process goes on for, the stronger the feelings of apprehension will get. If the Aussies were happy with the plans to create a convergence player, they would have said so, but perhaps the regulator is just making sure it effectively does its due diligence.

The tie up between the pair is supposed to be an effort to capitalise on convergence bounties and reinvigorate the competitive edge of the business. That said, last month the Australian Competition and Consumer Commission (ACCC) weighed into the equation raising concerns a merger would de-incentivise the market to offer low-cost services.

According to Reuters, the ACCC has extended its own self-imposed deadline to evaluate the merger by two weeks to April 11. If the watchdog cannot build a case to deny the merger by that point it probably never will be able to, but you have to wonder whether the additional time is being used to validate its position of opposition.

All regulators are supposed to take a balanced and impartial position when assessing these transactions, though its negative opinion last month suggests the agency is looking for a reason to deny as opposed to evaluating what information is on the table. Giving itself an extra couple of weeks will only compound this theory in the mind of sceptics.

To be even handed though, the consolidation argument is perfectly logical and completely absurd depending on who you are. There are benefits and negatives on both sides of the equation, irrelevant as to how passionately supporters and detractors preach to you. For all the arguments and evidence which are presented, a bucket-full of salt will probably be required.