Reliance’s quest to build a tech behemoth

Reliance’s quest to build a tech behemoth

19
0
SHARE


It was a question that seemed unlikely given Mukesh Ambani’s track record but one people were starting to ask in these uncertain Covid times. Could India’s richest man be overreaching himself in seeking to finance his mega-ambitious plans? While the world was in punishing lockdown, Ambani put the doubters to the sword by raising $15.5 billion for his Jio Platforms incorporated only last October.

The investors, who read like a Who’s Who of the global tech world, private-equity and sovereign wealth funds, have bet some eye-watering sums on Ambani’s vision. They include arch-rivals Facebook ($5.7 billion) and Google ($4.5 billion) and Qualcomm ($97 million).

Then there’s KKR ($1.5 billion); ADIA and Saudi Arabia’s PIF and Vista Equity Partners, both with $1.5 billion each; General Atlantic ($870 million); private-equity firm Silver Lake ($747 million); TPG ($600 million), and the list goes on.

Ambani’s aiming to create a tech behemoth rivalling what Reliance dubs “global peers” like China’s Alibaba and Tencent. Even if part of his dream becomes reality, it will count as a massive success. But Reliance faces rivals in every field it’s eyeing. As the name suggests, Jio Platforms will be not just be a telecom-service provider but a base for offerings from payment services to healthcare and education.

Why’s Jio Platforms heading down this route? Because being a mobile Internet service provider isn’t the licence to print money it once was. The big money’s going to the apps and services offered by telecom companies.

The fact is India’s a lusciously tempting market for the global tech giants, but they’ve all been desperately trying to figure how to turn it into a money-maker. In terms of numbers, India is Facebook’s largest market with 280 million users. That compares to 190 million in the US, which is the tech giant’s second-largest market numbers-wise. Similarly, WhatsApp has two billion users globally with 400 million from India. Then there was TikTok, the Chinese video-sharing social networking service that had 200 million Indian users till it was banned recently. The question for all these companies has been how to leverage these vast numbers to start earning profits for them.

For tech giants like Facebook, the answer may be hitching a ride with Jio Platforms. Facebook is firstly a financial investor — it’s now got a 9.9 per cent stake in Reliance Jio. The two companies aim to use WhatsApp as a media through which Reliance Retail and Jio can be accessed. Facebook’s WhatsApp Pay could also be one of Jiomart’s payment channels. Reliance also has its own Jiopay and Jiomoney. WhatsApp Pay has been granted permission for a phased rollout in India.

WhatsApp’s been facing demands to allow the security services access to its site. It’s been resisting this strongly, arguing it would destroy the virtues of having a full-encrypted service. Having a partner like Reliance might make it much easier for the international giant to negotiate with the government.

The core of Reliance’s dream is to bring the myriad of neighbourhood kirana shops and other small and medium-sized businesses onto the Jio platform — which clearly spells trouble for US firms like Amazon and Walmart that have also bet big on India. Last week, Ambani said Reliance will expand its Jiomart to offer not just groceries but electronics and fashion items too.

But beyond that, Reliance, known as the great business disruptor, has even greater ambitions to dominate almost every tech space up for grabs. It bought online education company Embibe in 2018. In February, Ambani put an additional ₹90 crore into the company and followed that up in April with ₹500 crore. In turn, Embibe also went on a buying spree and bought up OnlineTyari which helps students preparing for competitive exams. Last December, it bought Funtoot which offers online personalised learning.

Move to medical care, yet another sector that’s shifted online faster than expected in Covid-19’s wake. JioHealthHub is looking to offer everything from online consultations using JioMeet, its new cloud-based video-conferencing facility, to online space to store medical records. Reliance is also reportedly in talks with online pharmacy start-up Netmeds and has spent about $3 billion to buy eight companies since 2017. Other buys include Haptik, a chatbot company and music-streaming service Saavn.

Grand goals

Simultaneously, there are, of course, grand goals for the telecom sector. At Reliance’s online annual general body meeting last week (some 300,000 people logged in to watch) Ambani said it was ready to offer a 5G service it developed itself and which it could market to telecom firms globally.

Besides that, in partnership with Google, it hopes to manufacture low-cost 4G phones that would enable it to upgrade many of its 2G customers. The only question is whether it can make phones that will be cheap enough to bring in large numbers of Indian customers. In 2018, Jio also bought Radisys, which offers telecom solutions and supplies equipment for products like MRI scanners and is working with Qualcomm on 5G.

It’s clear Ambani’s been putting the pieces together to create an extraordinary business empire. But competitors litter the ground. In education, for instance, the market leader is start-up Byju’s, valued at $10 billion. Byju’s fortunes soared after the lockdown when it made its app free and in one week saw traffic rise 60 per cent. Another fast-moving online education site Vedantu added 100,000 users in the first 10 days of April during the lockdown.

Also, there’s Jio’s telecom rival Airtel which is moving quickly to add apps and services. Airtel’s been particularly fast to offer new services for which demand has been growing since Covid-19 changed our world. It’s tied up with Verizon to bring the Blue Jeans video-conferencing service to India.

Also, it has launched ‘Work@Home, which offers work-from-home solutions for businesses that have had to suddenly provide high-quality Internet services for its executives. At a different level, in March it also offered subscribers a fitness platform mainly targeting youth. It also recently bought a 10 per cent stake in online education company Lattu Kids.

Then, there’s gaming on which both Jio and Airtel are strongly focussing. Jio Games is still at the pilot stage. Jio is offering more of what are called ‘casual’ games. Airtel, meanwhile, has just tied up with Nodwin Gaming with the aim of boosting e-sports. Gaming has boomed during the lockdown and Bank of America says India will have 409 million gamers in 2020 and that will climb to 486 million by 2022.

Can Jio Platforms dominate every field from music to education and online pharmaceuticals? It’s attempting a giant play (in four short years Jio toppled market leaders Bharti Airtel and Vodafone Idea to become the biggest telecom operator), but this time the game will be much tougher.





Source link

LEAVE A REPLY