Reliance Jio: From Telecom Operator to Solutions Provider

Reliance Industries Limited (RIL), one of the largest conglomerates in the world, held its 43rd annual general meeting (AGM) on July 15. On the occasion, several noteworthy announcements were made for the company’s digital service business, showcasing the ambitions to transform Reliance Jio from a telecom operator into a solutions provider building a whole ecosystem. The AGM was held against the backdrop of a massive and unprecedented stake sale which saw over $15 billion investments in the past 12 weeks. In fact, during the AGM itself, Google was added to the list of strategic investors.

Reliance now has a net debt-free balance sheet, well ahead of its targeted date, which is impressive for a company of such a big size.

As of March 31, 2020, RIL’s total debt stood at $21.41 billion while Jio Platforms alone had raised $15.38 billion (excluding Google), funding over 70% of the total company debt. Reliance has a market cap of over $150 billion and Jio Platforms is close to half of this if we go by the current round of investments.

Jio has been a masterstroke for Reliance. Penetrating the market through affordable data plans and devices helped it build quick scale and value, which is now being realized. Starting as a telecom operator, Jio is now moving towards becoming a tech solutions company. Under its digital business, the Jio telecom arm will provide digital connectivity (wireless broadband, NBIOT, fiber for home and business), which can be leveraged by building solutions on top of it for consumers and enterprise, thus enabling new revenue streams and future-proofing the growth in a country which is at the cusp of digital transformation. Currently, Jio has a 4G network covering 99% of the population and the largest customer base. It has the largest data traffic in India with an average per user consumption of 11.3GB per month (smartphone and JioPhone combined) with approximately 5 hours of engagement per day. This scale, user engagement, robust balance sheet, the app and solutions ecosystem and the fact that Jio is now 5G ready will help it deploy these services and solutions even more effectively.

Exhibit 1: Value Creation Strategy of Jio

Jio Value Creation Strategy

Source: Reliance Integrated Annual Report 2019-20

Over the last few months, there have been some big names like Facebook that have invested in Jio. One of the new investors, and probably one of the most important ones, is Google:

Google Investment: Potential for disruption

  • Google and Jio have entered a binding agreement under which Google will invest $4.4 billion in Jio, from its $10-billion India digitization fund.
  • Together they will develop an Android-based operating system for smartphones, committing to bring affordable 4G smartphones to propel upgrade of 350 million feature phones.
  • There is also a ready base of Jio Phone users which can upgrade to affordable smartphones.
  • This will also help bring users online and enhance the experience and monetization opportunities of a host of Jio platform applications and services.

Exhibit 2: Investments in Jio, Including Google

Investments in Jio, Including Google

With this partnership, Jio has hinted at targeting the 2G users and upgrading them to 4G. This will become even more lucrative when it comes to Jio’s hardware offering. Hence, Jio will be taking another shot at entry-level smartphones, partnering closely with Google. Google’s partnership will give it more flexibility to offer stable hardware and software experience. Individually, both Jio, with its initial 4G smartphone launches, and Google, with its Android One program, tried in the past to capture the entry-level smartphone userbase but didn’t succeed. India is the second-largest smartphone market in the world and still underpenetrated relative to many other markets (40% smartphone penetration). This presents a big opportunity for ecosystem players and companies including Google are eyeing growth opportunities in this market. Google’s investment in Jio is surely not a surprise considering the underlying opportunity. This can be leveraged in many ways, especially with a partner like Jio which has strong platform ambitions to scale up not just in India but globally as well.

Jio was able to disrupt the 4G ecosystem in India with affordable data and devices. With its partnership with Google, Jio has the same potential in 5G as well. It is already ready with its 5G solutions and probably will be the fastest in India to launch a 5G network with scale. This combined with an affordable 5G device has the potential to take significant share away from brands as well as operators eying the Indian 5G market in 2021-2022.

Apart from this partnership, there were some industry and consumer applications and solutions also displayed by Jio during the AGM. This is in line with its strategy to be a platform player in the future. Solutions showcased during the AGM included Jio Set Top Box, Jio Glass, Jio Meet and Jio Mart.

Jio Set Top Box: Content aggregation, voice search and more

Jio Set Top Box now aggregates content from 12 providers and users can do voice search through genres, actors, mood, and other categories. Since there are multiple apps, which means multiple logins, Jio has gone for a single sign-in, thus making the interface more user friendly.

There is an increasing demand for content and aggregation of OTT players in the market. With movie halls closed due to the COVID-19 pandemic, there is also an increase in the number of movies being released on OTT platforms. Users are staying home and consuming content, which can work in favor of Jio Set Top Box.

Jio Glass: Display of capability

Jio also unveiled its mixed reality glass, which weighs only 75 grams. It offers support to 25 apps, personalized audio, cable to attach to smartphones, holographic call, and support for the presentation. There are several opportunities and use cases for Jio Glass, some of which are listed below:

  • Integration with Jio Meet
  • Integration with Embibe (online education app from Jio) to provide classroom experience at home and innovative learning approaches using holograms.
  • Jio Glass also has the potential to be integrated with the solutions Jio may bring out for the manufacturing segment.

Virtual reality has been the buzz word and potentially one of the most disruptive technologies being talked about now. The experience of VR Glass will be much holistic with 5G at the back end, which remains elusive in India. While this shows what Jio is capable of, the commercialization of Jio Glass could well be two to three years down the line.

Exhibit 3: Virtual Meeting Using Jio Glass 

Exhibit 3: Jio Glass Hologram

Jio Meet: Bringing online collaboration and use cases

Jio Meet is the online meeting platform from Jio. The platform offers no limit on the number of participants and the duration of the call. Several use cases were shown for education and healthcare. The ed-tech sector is growing substantially in India and Jio can leverage this by the integration of Jio Meet with Embibe. Another opportunity is the integration of Jio Meet with Jio Health Hub for online consultation.

 Jio Mart: Digitizing retail with scale

Jio Mart is an O2O model (Online to Offline) which will connect the local grocery retailers directly with the consumers and replace the cash-rich business model. The omnichannel tech platform has already registered 250,000 orders a day in 200 cities through its beta version. Jio now plans to expand this both in scale and new offerings (will scale to electronics, fashion, pharma, and health). Jio Mart holds one of the largest potentials for Reliance, especially after investment from Facebook. We have analyzed this in a previous blog (read here). Reliance is the biggest retailer in India and two-thirds of the Reliance retail stores are in Tier 2 and Tier 3 cities. Jio Mart can act as a single platform for its own retail business to come online and to extend the reach into smaller cities with huge untapped potential.


In this AGM, Jio has showcased its ambition to transform itself into a tech ecosystem player with an approach to provide industry solutions, some of which were showcased during the event. With the scale and user engagement achieved, the readiness of 5G and strategic partnerships with the likes of Microsoft, Facebook, Google, Qualcomm and Intel, Jio has laid a solid foundation to achieve its ambition in the coming years. The roles of telecom operators and internet giants have been converging over the last few years and Jio is a prime example of this. The telecom operators are now pivoting from being connection providers to transforming themselves into end-to-end players. Jio is transforming into a “Super Operator”.

Reliance Jio: World's First 'Super Operator'?

In the world’s second largest mobile market, Reliance Jio, India’s leading Communication Service Provider (CSP) or mobile operator, has taken the entire global ICT industry by storm with its vision and the most successful “serial” fund-raising over the last eight weeks. Reliance Group Chairman Mukesh Ambani (world’s sixth richest man with a net worth of $72 billion), with the launch of greenfield 4G network Jio in 2016, changed the entire competitive and technology landscape in India, amassing close to 400 million 4G subscriptions.

India went from 14 operators down to 4, with two out of the remaining four already on a life support and a third one reeling under debt, instantly offering Reliance Jio a monopoly position. A monopoly position married with serious money muscle and a clairvoyant vision to build a digital platform to empower and democratize technology in a country of 1.3 billion people, making it the most attractive company for any investor or stakeholder to partner with. It is called Jio Platforms.

Jio Platforms Needed Strategic Partnerships to Cross the Chasm

Jio, while amassing a healthy base of 4G subscribers consuming almost 13GB per month, has been still generating an ARPU of less than $2 per user. But to create stickiness, it has also build a platform full of services spanning Content, Commerce, Cloud and Communication, the four key pillars of any consumer’s digital lives. Jio has also vertical ambitions of own-branded devices and in-house development of network and data center elements as it already generated to much scale and has a strong buying power against suppliers. Having said that, the deeper capability, reach, execution and adoption of some of these OTT apps and services has been behind as it competes with bigger rivals. This has also led to Jio going in for acquisitions and a partnership route over the last year or so to help it build, integrate and execute this vision for  its 400 million subscribers, tens of millions of businesses, hundreds of millions of households and beyond. There have been significant gaps in its platform’s capabilities to help push digital platform services and applications over the chasm. Though the vision is still great but needed investments and partnerships with scale and tech know-how. The slider graphic at the end of the post highlights the breadth of Jio Platforms but the capability to execute and adopt has been low to moderate.

$20 Billion Investments in Jio Platforms in Eight Weeks

With the world reeling with the COVID-19 pandemic, the demand for operator services has shot up, offering the right moment for Jio to announce a series of investments cum partnerships from the biggest technology companies such as Facebook, Google, Intel and Qualcomm, and investors such as Silver Lake, KKR, Vista, Saudi Arabia’s PIF, General Atlantic and TPG, which it has been working on for several months. Reliance raised $20 billion in just eight weeks, selling close to 33% stake, as valuation of Jio Platforms climbed to $60 billion, giving it the best funding round ever for any technology company. With this money, Jio has cleared all its debts, which include more than $11 billion to build its 4G network. The end-result: Jio Platforms is now debt-free, well-funded, has a clear vision and the monopoly status to become a ‘Super Operator’.

‘Super Operator’

We believe Reliance Jio or Jio Platforms is transforming into a Super Operator which is no longer a dumb pipe. With a platform approach, it is laying a strong foundation to play a key role across the users’ digital lives and businesses’ digital transformation journeys. None of the operators we can think of globally promises to build, offer and control what Jio is capable of.

Jio’s strategic partnerships with key companies such as Facebook, Google and Microsoft, the three biggest tech giants, will help it drive Commerce, Communication and Cloud areas, respectively, where it had been weak in terms of capabilities, reach and adoption. Further, acquisitions such as Haptik (AI voice Assistants), Embibe (Education Content Platform), Reverie (Multiple Language Integration), Savvn (Music Streaming),  Tesserect (AR/VR) and Radisys (Network Stack) bridge many capability gaps to foster in the upcoming 5G era.

With 5G around the corner, Jio can lay out a fully-controlled greenfield network to build the software stack via Radisys in fixed as well as wireless networks. It remains to be seen if there are any other big moves on the Radio Access Network (RAN) hardware side or it will depend on the long-term partner Samsung.

With Google, Jio aims to democratize 5G hardware with plans to offer the most affordable 5G Android smartphone in the market with the OS specially optimized for a low-cost 5G Jio smartphone. We estimate this to soft launch in Q4 2021 and proliferate through 2022 and 2023 with a target price point of sub-$100.

This is how the portfolio vs capability graphic looks with investments, partnerships and acquisitions to make the company a Super Operator. Though all eyes will be on Jio over the next five years on how it builds on its vision and helps generate great ROI for the investors and partners once it goes public and beyond the Indian shores.

For more details on what Reliance Jio announced, from its latest partnerships to new offerings from video conferencing to AR/VR headsets to e-commerce platform and more, follow the upcoming post here.

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