To say Mr Ambani has good relations with the current government is underselling his influence. He has good relationships across the spectrum of Indian political parties (except maybe the communists who are effectively irrelevant).
However you feel about how Jio got its foothold in the telecoms game ([1] has details), it’s sheer scale makes it an attractive investment. It’s one of two major national 4G networks and an astonishing amount of data moves through it. They’ve big ambitions on the 5G front. They’re also building India’s largest last-mile fibre network. Given that Ambani wants Jio to be debt-free by next year, and an upcoming IPO for Jio by 2024, key industry players falling over themselves to grab a pre-IPO piece isn’t surprising.
The concern, of course, is the complete lack of privacy legislation in India, and how this impacts Jio’s ambitions re “monetising” its users and their clickstream activity.
Yep if anything I hope the Ambani family's escapades with Jio doesn't whitewash their deserved reputation as perhaps the most corrupt company in India.
For those not aware, Jio itself came into being via a scam. (That the comment I replied to is alluding to). The TL;DR is Reliance acquired a company that had only managed to win an Internet Service Provider license auction (that too in a dubious manner [1], [2])
Then Reliance 'convinced' the government to let them convert the license [3] to allow them to provide voice services as well, for a paltry fee (the amount they paid was set in 2001 and did not account for inflation over 12 years - which is pretty significant in India). Thus Jio was able to become a full blown 4G cellular provider at a fraction of the cost of competitors like Vodafone, Airtel etc.
TL;DR (not necessarily from the article, but from various sources):
- Jio is basically a monopoly
- It prints an absurd amount of money
- It's only "tech" because it can essentially control the smartphone market in India (INSANELY HUGE GROWTH)
- Ambani is the most powerful man in India, but also was over-leveraged on his oil business and needs capital for growth. He wants more global control/influence and US tech companies want more control over India. It's a win-win for both.
- $100B in 5 years is probably a lowball figure
In other words, imagine Google, AT&T, and WeChat all controlled by one company in one of the largest potential GDPs in the world.
> Mukhesh Ambani who's got a good connect with the current ruling Government
To be fair, Mukesh has got good connections everywhere. He is India's most powerful person.
Amitabh and the Shahrukh (some of the world's richest actors, both half billionaires) both volunteered as servers at his daughters wedding as a show of appreciation. If a man can command the most powerful of his country to such level of willful subservience, then every Govt. will try to curry favor with him.
I will add, that while his intentions might be entirely selfish, the pace at which Jio was able to bring affordable 4G to the whole country is incredibly empowering for rural / small town India.
That being said, adding money to the pool of what is quickly becoming a monopoly is not a "fund to digitize America" as Pichai put it.
I think the lack of geographical proximity to Jio, didn't give Mr. Ben the complete picture of the forces at play.
The story of Jio (Reliance) cannot be told without the political-corruption-nexus in India, by investing in Jio - Facebook, Google, Qualcomm etc. not only acquire stake in 'The Enterprise' of India but also guaranteed of political favors apart from access to data from millions of Indians through a single unregulated channel.
Let me give you an example of the political reach companies like Adani, Reliance etc. which are in nexus with current ruling party - BJP have in India. I have personally heard from Ex. High Court judges that when they were presiding over cases involving Adani, Reliance they were approached by officials from those companies and were asked "Would you like to be a Governor after your retirement?".
As there is practically no real opposition party left in India, BJP will rule India for for decades to come as it slips into total authoritarianism(like CCP).
So being on good terms with Jio/Reliance aka BJP, guarantee these companies unfettered access to Indians and especially their data. I'm sure BJP already has the necessary infrastructure in place for analyzing data from Jio customers, now with Facebook, WhatsApp, Google you can see where this is going.
As any non-alignment with Jio/Reliance/BJP means 'the end' as we are seeing with even Govt. institutions like BSNL(Telecom), HAL (Aircraft Manufacturer) etc. Any business in India or from abroad now should appease Jio if they have to survive.
They’ve already shown troubling signs. When Jio was launched, senior executives, when asked about how they’ll increase revenues, said, “There’s something called as Deep Packet Inspection and the potential is enormous”[1]
Second, Jio frequently blocks VPN connections. Proactively and sometimes without reason even if there’s no government order. Sometimes, I’ve had to use techniques from blog posts about bypassing the great firewall of China to be able to connect to VPN services. Its not as ridiculous as the actual GFW but the signs are there.
Reliance is also engaged in a plethora of businesses, especially consumer facing ones and have shown increased desire to link it all together.
By their math, acquiring those 100 million customers cost 25 billion USD. The writer is sceptical that Jio will ever make that money back.
Personally I think it's awesome that an Indian billionaire is spending his money on local digital infrastructure. Even if Jio doesn't become hugely profitable, its network seems to be a boon to India.
I agree. If this trend of pouring of billions of $$$s of Big Tech money into the Jio platform continues, it won't be long until Jio becomes the monopoly in the country, especially given the founder's proximity to the current administration. [0]
And imo, even though this is bad for overall competition and culture of innovation in the country, this is a smart move by both Facebook and Google, especially given the recent backlash against Chinese tech and software, which have come to dominate India's tech scene; Indian government quite recently banned almost all the popular China-origin apps [1] and there is a growing anti-China sentiment in the country. I feel there has never been a better opportunity for Jio to step up its game and fill in the void left by the government-mandated bans, and from that perspective, these investments from the Big Tech firms make sense.
People ignore the fact that even with outsized influence, Reliance will be subject to market and other economic conditions that could result in a negative return on their investments. Mukesh Ambani's brother is almost bankrupt, and not for lack of trying to avoid that.
Mukesh Ambani is taking on seemingly unpalatable risks because he has nothing better to do with his money. He has a large amount of shareholder support and a huge base of users he can market Jio's products to. These users and the overall market will ultimately decide whether they want to use these products or not.
Yes, but don't forget that "Ambani family have close ties to the ruling government"
and also Jio is "the only firm that won a pan-India 4G license, leveraging the superiority and cost-efficiency of 4G".
I'm super curious what technical reasons mandate that there can be only one 4G license in a country with 1.4 billion people. And how that affects competition in a country that has Corruption Perception Index equal to that of Morocco, Ghana, China or Benin.
People who want privacy won't use Jio. At the moment Ambani's own the government this was pretty much clear when this article came "Reliance’s Jio Institute gets government’s Institution of Eminence status but it’s yet to be set up".
Theres nothing much need to be said about this.
What's interesting about current Indian market, everybody want to settle up their debt or planning on delisting. Jio is just a way of Ambani settling up his debt nothing else new in it. JioMart is just another super Market like DMart(walmart clone). There is nothing new or benefit to end customer. Just another app.
Jio was never profitable from start. It won't be profitable anytime soon either.
Please note this isn't first time Mukesh Ambani is dipping his feet into telecommunications. He did before too, but he lost that business to Anil Ambani.
I can’t understand why tech’s biggest players are obsessed with it. I mean, I know what they may be thinking and why they’re salivating. But I believe they’re just behaving as if they don’t want to be left behind and seen as losers, whereas the truth (IMO, and take this with a big pinch of salt) is that this looks like the seemingly limitless amount of money pumped in by Uber or SoftBank in the hopes of “capturing the market and making boatloads of money”, only to realize later that the underlying proposition and the model were defective, which they will never admit.
Reliance has a lot of political backing (and Jio is what it is today because of concessions), but again strictly IMO, I think all these tech companies “investing” in Jio will be left holding the bag in a few years.
Most Indians care only about the cheapest workable plan, product, service, while making a purchase. It's not about Jio, it's about the 500 rupees free call, free SMS, free 4G plans. As long as Jio offers it they'll use it. They'll drop it as soon as something cheaper comes around.
Mukesh Amabani, is mostly raising money because he had simply too much debt, and he is also getting old. It could also be a part of larger succession planning. His kids are not that much hands-on into business as much as he was with his father. It makes sense to have a Tata Sons Trust like scenario where professional managers runs the companies while the companies are owned through a holding trust owned by his children.
The experiment with Anil Ambani's mismanagement and the state he has left his business is a lesson for Mukesh to not let it repeat with his own children.
It should be noted that this was achieved by giving 6 months of 4G data (1GB/day at > 6Mbps) + free telephony, for a mere $6.
Things should normalize once the freebies stop; Jio however will have a massive collection of Indians Biometric identities (and much else skimmed off of "Big Brother" Aadhar) and their browsing habits, which we currently have no idea how they'll exploit. Worse, we have no regulation over Aadhar's data-sharing, nor over the privacy of citizens.
India's state telephony company now injects ads into non-HTTPS sites, and tracks users using the services of a private company. Considering Ambani's complete lack of basic ethics, one can be sure that they'll be much more clever with it than the generic dolts at BSNL.
It's wrong to characterize it as "one person being the sole beneficiary of incoming businesses in India"
The recent spate of investments in Reliance JIO, have been just stake purchases. He is selling stake in his company to get capital for expansion.
Ambani has signaled that he wants investment to further grow an already rapidly growing empire of media services.
A few things are very favorable to Jio
a) Due to COVID and the expectation that this pandemic and its ripple effects will be felt for a few years, there is a very high likely hood that new customers will start consuming digital media services. And that is the key. Investments in JIO reflect the fact that it is the only company that has all it's cards right to capture the new user market.
b) Also, JIO has been at the cusp of an already rapidly increasing user base, that includes a large portion of rural people. It has seen a massive growth in user base and actual users too (No one is simply taking a phone connection and keeping it. They are actually using their JIO connections to consume content)
c) And the pandemic has come at just the right time too. Old guard companies are caught on backfoot. There is tremendous good will in people for JIO. JIO reduced costs 30X for data. It was a game changer. Peoples media consumption in India exploded.
d) In addition to this, Reliance group also has its hands in the Media and Entertainment industry. Not to mention retail, FMCG, etc.
So, as on date, JIO has the following services fully available to a large and every increasing base of users, this is apart from dead cheap 4G internet connectivity on phones and dongles.
1) Movies
2) TV Channels
3) Retail Shopping, they recently launched a competitor to Amazon.
4) Games
5) Educational content.
and a myriad more.
But here comes the best part. There are a couple of reasons India tailor made for services.
1. It has a large pre-teen, teen and young adult population, that will dominate consumer markets for at-least 5 decades.
2. It has 28 states, 122 major languages, and similar set of cultural groups. So you have ample amount of scope to localize content and have a good audience for that content.
3. Indians love to indulge in languages and cultures from other parts of India. Punjabi songs are loved all over the country. Telugu cinemas have huge markets in southern states. Tamil movies are revered all over the country. And Indians consume a lot of dubbed content. Including international ones, like Korean etc. So what this means is that media produced for one local culture / language, if received well, has a ready market all over India. This reduces risk and increases rewards.
4. Indians love to consume content. We are a noisy civilization. We consume a lot of content and want new content all the time. Movies are a huge part of the daily lives of rural villages.
5. Large number of people in rural areas have been using smartphones for the past 5 years, thanks to reducing handset costs and usage costs. They are already consuming content on the internet via Youtube, etc. They are a ready market to push content and services too.
I suspect JIO is looking for large investments to create new content for its media services and setup a distribution network for it's retail services.
Additionally, Reliance is highly respected in India. When the current CEOs father ran the company, millions of middle-class families in India bought houses, cars, got their children married, gathered retirement funds, etc riding on the sheer growth of Reliance as a company.
However you feel about how Jio got its foothold in the telecoms game ([1] has details), it’s sheer scale makes it an attractive investment. It’s one of two major national 4G networks and an astonishing amount of data moves through it. They’ve big ambitions on the 5G front. They’re also building India’s largest last-mile fibre network. Given that Ambani wants Jio to be debt-free by next year, and an upcoming IPO for Jio by 2024, key industry players falling over themselves to grab a pre-IPO piece isn’t surprising.
The concern, of course, is the complete lack of privacy legislation in India, and how this impacts Jio’s ambitions re “monetising” its users and their clickstream activity.
[1] https://m.thewire.in/article/tech/reliance-jio-telecom-regul...
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