South Asian Insider
What Is Reliance Jio Going To Do With All That Money It’s Raising?
If there's one thing Reliance chairman Mukesh Ambani is good at, it's being a sharp businessman. At a time when the world is reeling under the COVID-19 pandemic with markets and economies all heading south or navigating turbulent waters, Reliance is one of the few companies grabbing headlines for the investments it has been bringing in.
Timing. It's perfect.
On 22 April, Facebook bought a 9.99 percent stake in Reliance Jio Platforms for a whopping $5.7 billion (Rs 43,574 crore). On 4 May, US private equity fund Silver Lake Partners bought a 1.15 percent stake in Reliance Jio Platforms for $750 million (Rs 5,655 crore).
Silver Lake Partners is one of the world's largest technology investors. It has invested in top tech companies such as AirBnB, Alibaba, Twitter and ANT Financial (earlier known as Alipay) among others.
Betting Big on 5G
Just what is Reliance Jio going to do with all the money it is raising? Why are companies like Facebook and Silver Lake rushing to invest in Jio?
Jio must be doing something right. Jio's statement says its investors are impressed with the company's grasp on broadband connectivity, smart devices, big data analytics, artificial intelligence, IoT, cloud computing, AR, mixed reality and blockchain.
For 4G, Reliance was dependent on Samsung equipment. It was also conducting 5G trials with Samsung. However, the Telecom Regulatory Authority of India (TRAI) has been pushing for local manufacture of telecom equipment in a 2018 notification. Reliance chairman Mukesh Ambani at a meeting with US President Donald Trump recently said that Jio was the only network in the world that will not have any Chinese components in it while setting up 5G. Rivals Airtel and Vodafone Idea have tied up with Huawei and ZTE among others for 5G equipment. Reliance Jio instead acquired a US-based firm Radisys in 2018 for $67 million and has merged its subsidiary Rancore Technologies with itself to help in developing telecom equipment. This equipment will be either designed in India and built abroad or designed and built in India, as per its indications to TRAI. Making its own equipment is just one part. It also needs deep pockets for 5G spectrum. The 5G spectrum band is between 3,300 MHz and 3,600 MHz.That's a minimum of Rs 49,200 crore an operator needs right there. Coincidentally, guess who has just raised Rs 49,229 crore in the past couple of weeks?We'll get through this! Meanwhile, here's all you need to know about the Coronavirus outbreak to keep yourself safe, informed, and updated.
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