by PRABIR PURKAYASTHA
The conglomerate has thrived with the blessing of both parties, and now global investors are backing Reliance Jio
The Indian conglomerate Reliance Industries is using its newly minted telecom monopoly to expand into other sectors of the Indian economy in partnership with multinational companies including Google, Facebook and Microsoft. Its 5G claims are a signal that it is now a part of the US-led global alliance against China’s tech companies.
The combined market cap of the Reliance oil and telecom empire is US$189 billion, making it the only Indian company in the top 50 global list and 10th in Asia. In four years, Reliance Jio used its parent’s oil and gas revenues to power its way into telecom and become the leading Indian player. It bled the others with its initial low, predatory pricing rates, until they surrendered, accepting Jio as the undisputed market leader.
Jio has also made claims that its network is free from any Chinese equipment, and of an in-house, “indigenous” fifth-generation technology, positioning itself as a major player in the US-China 5G trade war.
But even with its fat oil war chest, the Reliance empire had a huge overhang of debt. To liquidate the loans, it floated Jio Digital as a new platform for services riding on top of the Jio telecom network. In a scant few months, by selling stakes of about 30-32% in this company, it has raised or in the process of raising capital to the tune of $22 billion, and wiping out a major part of its debt.
Apart from financing companies that have invested, there are key tech players with strategic investments ranging from Facebook’s $5.7 billion to Google’s $4.5 billion and Microsoft’s $2 billion. The other $10 billion worth of investments in Jio is from a clutch of venture funds that include sovereign funds of Abu Dhabi and Saudi Arabia.
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