After Jio’s 4G network and optical fibre-based broadband connection with a speed of up to 1 Gigabit per second, Mukesh Ambani, chairman of Reliance Industries Limited (RIL), is now planning to disrupt the country’s e-commerce industry with a $24 billion digital-services behemoth.
The Reliance Industries board approved a proposal to plow 1.08 trillion rupees ($15 billion) into the fully-owned subsidiary, which will, in turn, invest that amount in Reliance Jio Infocomm Ltd, the conglomerate’s telecommunications venture.
A series of capital transfers would make Jio, which already has capital of 650 billion rupees, almost debt free by March 2020, the parent said on October 25.
The move by Asia’s richest man is the latest sign of the Reliance group's focus on data and digital services for future growth, as it builds an online platform to take on the likes of Amazon.com and Walmart Inc’s Flipkart Online Services in India.
Ambani told shareholders in August that the new businesses, including retail, are likely to contribute to half of Reliance’s earnings in a few years, from about 32 per cent now.
With the new holding firm, Ambani is also readying the businesses for an initial public offering, which he has vowed to complete within five years.
Ambani has also been stitching together a network of partners through acquisitions and stake purchases to build a backbone for his e-commerce plans.
In the Indian e-commerce space, Flipkart India's net loss has widened by around 86 per cent, year-on-year. However, its total income rose by about 43 per cent, including the consolidated income of Flipkart Internet Private Limited, which was up 57 per cent and has reported lower losses. To know more, listen to this podcast...