While the coronavirus curve of India is peaking, the economic curve has hit rock bottom. However, the IT and Telecommunication sectors of India have started to look better right now.
Jio Platforms, a subsidiary of Reliance Industries (India’s most valued firm), has raised about $20.2 billion in the past four months from 13 investors by selling about a 33% stake in the firm. In this press release, they declared that 2 of the biggest tech giants of the West,Google, and Facebook, have invested in the company and now own stakes in our “Atma-Nirbhar” Company. Other investors, including General Atlantic, Silver Lake, Qualcomm, Intel, and Vista, have paid a 12.5% premium for their Jio Platforms stake.
What’s in it for Reliance?
With the economic disruption, the telecom giant has suffered huge losses, with a total debt of Rs 161,035 crore, as on March 31,2020. The flagship business, refining, and marketing (R&M) have faced severe margin fall as its earnings before interest and tax (EBIT) dropped 15.2 percent to Rs 4,508 crore in the first quarter, despite increasing the throughput at its Jamnagar twin refineries to 17.5 million tons (MT) from 16.6 MT. As the petrochemical production volume fell, affecting the revenue, the exploration and production (E&P) business continued in red. So, these massive investments have helped Reliance pay off debts.
“Our net-debt was Rs 161,035 crore, as on March 31, 2020. With these investments, RIL has become net debt-free,” Reliance Industries NSE 3.71 % said in a release on Friday.
Facebook Investment
But you must be thinking why would a big social media company like Facebook is all of a sudden interested in invest in an Indian company. So, read on to understand the tech giant has in mind for India!
On April 22, Facebook said it will invest Rs 43,574 crore in Jio Platforms for a 9.99% stake in an all-cash deal that will help the oil-to-retail conglomerate.
What’s in it for Facebook?
With multiple personal data breach issues being tagged to FB, we all know they weren’t in a perfect place, and due to the #BLM movement issues, FB had been losing a lot of Ad revenues. In short, the payment channels of the company were drying up. Jio was the best window for investing money in India. Facebook’s history in India is complicated, as an effort to provide free Facebook access drew criticism from net neutrality activists and led to complaints of digital colonialism. So, investing in the RIL group meant going in a partnership with the richest man of the country, MR. Ambani, which came with his secure political connections.
So, now the real question is, What is FB’s plans in India?
E-Commerce has boomed in India under the 2 major players: Walmart and Amazon. When it comes to flourishing in Rural/ Tier III India, both have terribly failed to make E-Commerce available to them.
Now, why is that? The reason is that, despite India going through the Digital Revolution, more than 50% of the country’s population is still deprived of 4G Data. Hence, using Internet-based applications is still uncharted territory for them. Now, Jio aims to eradicate 2G and 3G from the country, bring everyone online, and finally make E-Commerce available through Jio Mart.
JioMart delivers grocery and daily essentials from nearby stores. Now, you must be thinking, why am I lecturing on India’s Internet scenario? Here’s the twist: You will be reached via our representative via call, message, or WhatsApp. And guess who owns WhatsApp? Facebook. Customers in China and Indonesia have shown a preference for super apps, which allow people to interact with an umbrella brand for everything from chatting with friends to booking cabs and managing money.
Ambani could be best-suited to try the model in India, especially if he gets to build it around the popular WhatsApp.
But this isn’t all. Facebook has a lot of “Indian Dreams” for us. With the
availability of data at dirt-cheap costs, developments in Computer Science are all set to boom under the influence of these tech giants. Here are some of the plans by FB.
“E-commerce will happen in a very localized way” in rural India, said Tarun Pathak, an analyst with research firm Counterpoint. It will happen not on PCs but on inexpensive smartphones and, “The familiarity is there for WhatsApp,” he said. “It makes sense.”
Google Investment
On Wednesday, Google announced it would invest $4.5 billion in India’s Jio Platforms, the unit of Reliance Industries overseeing music, movie, and telecommunications ventures. The investment that buys Google a 7.7 percent stake in Jio and a seat on its board, is the latest in a spree of Western investments into Reliance’s digital company.
What’s in it for Google?
Google said that it plans to invest $10 billion in India over the next five to seven years as the search giant looks to help accelerate the adoption of digital services in the key overseas market. Now, with Tech Giants avoiding China for the pandemic. India is a key foreign market for Google, where a range of its products and services, including Search, YouTube, and Android, has made inroads with much of the entire online population. The nation of 1.3 billion people has emerged as perhaps the last great untapped growth market for American and Chinese giants.
Right now, more than half of India’s population does not own a smartphone. With the target of making smartphones available to all, Jio launched its low budget phones, but most of the apps were not available on the
Kai OS on that phone. So, now Google and Jio would work together to develop an OS that is both scalable and cheap, which can be used for Jio Phones.
“There’s still more work to do in order to make the internet affordable and useful for a billion Indians…from improving voice input and computing for all of India’s languages, to inspiring and supporting a whole new generation of entrepreneurs”- Sundar Pichai
Four areas of google’s focus:
1. First, enabling affordable access and information for every Indian in their own language, whether it’s Hindi, Tamil, Punjabi, or any other.
2. Second, building new products and services that are deeply relevant to India’s unique needs.
3. Third, empowering businesses as they continue to embark on their digital transformation.
4. Fourth, leveraging technology and AI for social good in areas like health, education, and agriculture.
Without the threats of data theft, Google’s plans for India sound pretty good to any citizen as this means higher internet accessibility means the greater reach of education and digital equality.
Well, we can only thank RIL for moving forward the country’s dream of “Digital India.”
It goes without saying that Jio definitely created that window for the Western Tech Giants to enter and actually see the prospect in Indian Market. Also, the way Reliance Jio plans on touching lives and revolutionizing digital services, education, healthcare, and entertainment that can support economic growth and social inclusion at a critical time in the country’s history.
It would be accurate to say that this Pandemic didn’t stop this man of immense business mettle from standing up against the odds and take us a step closer to a “Chinese-Investment free” India.
“CCI approval helps both the companies to put their energies around the digital commerce initiatives, and it may also encourage other *FAANG names to look at Indian telcos,” said Rajiv Sharma, head of research at SBICap Securities. Facebook pegged Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value.
*FAANG is an acronym for Facebook, Amazon, Apple, Netflix, and (Google parent) Alphabet.
So, with this, I would like to conclude on a positive note that one can make the most out of an adverse scenario.All they need is hard work, vision, and a heart that never gives up. RIL has successfully brought the future to the country, but now it’s in the youths’ hands to show them that we are worth investing in.
