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Unlocking The Jio Treasure Trove

Jio Platforms attracts unprecedented investments unlocking value and future growth in sectors like telecom, ecommerce, broadcasting, media, payments and retail

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Over 11 years after his social networking platform enabled it, Mark Zuckerberg pressed the ‘Like’ button on Mukesh Ambani on April 22 this year. Facebook, the world’s largest social media platform, placed a Rs 43,574 crore ($5.7 billion) bet on Jio Platforms (JPL), a technology subsidiary of Reliance Industries (RIL). The transaction gave Facebook a 9.99 per cent stake in JPL.

This acquisition was the first of 11 deals that has since seen marquee global investors also hit the ‘Like’ button on JPL. Up until June 18, an unprecedented Rs 115,693.95 crore was raised from 10 investors. Notably, the investments by these private equity giants – Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton and PIF – are at an over 12.5 per cent premium to the valuation of the Facebook investment.

This fund-raising blitz is the largest continuous such exercise by any company anywhere in the world. The feat is even more impressive given that it comes at a time of an unprecedented global recession due the Covid-19 pandemic.

Market experts say the deals are a ringing global endorsement of the size and scale of Jio and its impact. Before Jio, India was ranked 144th globally in data consumption with around 200 million gigabyte (GB) usage a month. After Jio, the country is now ranked number one globally with an estimated 2.5 billion GB of data usage every month.

So, why are the world’s largest and most sophisticated investors putting their money into a telecom network? How did a company that started commercial operations as a traditional voice and data provider in September 2016 attract investments from those who rarely invest in traditional telecom service providers?

Facebook Likes Jio

The answers are to be had from Zuckerberg’s mega ‘Like’ of Jio, a bet that firmly establishes Jio as a unique, digital technology-led consumer platform. By all accounts, the Facebook investment is the largest for a minority stake by a technology company anywhere in the world. It is also the single largest foreign direct investment in the tech sector in India.

Jio is no longer content being just India’s largest mobile network with 388 million subscribers (it pipped Bharti Airtel to the top spot last July). Ambani’s vision has led to a partnership with a social network that has 280 million users in India, the highest amongst Facebook’s 2.6 billion monthly active users worldwide as of last March.

Analysts are finally being able to make sense of the gigantic bets that RIL CMD Mukesh Ambani has placed over the years on transforming his energy conglomerate into a digital technology-led consumer platform.

Since there are no comparable examples of such a mammoth fund-raising exercise and partnerships, what does the blurring of boundaries between traditional telecom, content and new age social platforms imply?

India’s Digital Rise
The best answer came from Ambani himself. Commenting on the deal with Facebook, he said that when Reliance launched Jio in 2016, “it was driven by the dream of India’s inclusive digital rise to improve the quality of life of every single Indian and propel the country into a leading digital society in the world”.

“All of us at Reliance are therefore humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India for the benefit of all Indians,” Ambani said.

A glimpse of the future was provided in a post on Facebook around a month after the Jio deal.

On May 19, Zuckerberg announced Facebook Shops, a mobile-first shopping experience where businesses can easily create an online store on Facebook and Instagram for free. Firms can list their products, sell them through WhatsApp, Facebook Messenger and Instagram Direct. Products can also be tagged on Facebook and Instagram livestreams and any user clicking on the tag will be taken to a product ordering page.

Given this backdrop, it is no wonder the markets are sitting up to take fresh note of these developments.

An Axis Capital research report summed it up best. “What seemed like unrelated diversification over the years, has turned into a unique value proposition today – a physical-digital model for consumer businesses.”

The 6Cs of RIL
The Axis report argues that RIL’s game plan and vision can be better understood through a ‘6C’ framework of Communication, Computing, Commerce, Chemical, Content and Credit. “Investors see JPL as a unique consumer platform with distribution strength that can be leveraged across connectivity, commerce and credit using technology prowess (the computing platform) to stay ahead of the curve.”

A key reason for not viewing Jio as a pure play telco any longer is the Rs 11,500 crore (around $1.6 billion) that it has invested in creating an ecosystem of technology capabilities in software, blockchain, artificial intelligence, media and music streaming, among others.

Jio has also registered dozens of patents in areas of communication technology, biometric security, privacy protection and the provision of multimedia services to user equipment among other unique innovations.

Mukesh Ambani On The Various Deals
On Facebook’s Rs 43,574 crore investment (April 22):
“When Reliance launched Jio in 2016, we were driven by the dream of India’s Digital Sarvodaya – India’s inclusive digital rise to improve the quality of life of every single Indian and to propel India as the world’s leading digital society. The synergy between Jio and Facebook will help realise Prime Minister Shri Narendra Modi’s ‘Digital India’ mission with its two ambitious goals — ‘Ease of Living’ and ‘Ease of Doing Business’ – for every single category of Indian people without exception. In the post-Corona era, I am confident of India’s economic recovery and resurgence in the shortest period. The partnership will surely make an important contribution to this transformation.”
On Silver Lake’s Rs 5,655.75 crore investment (May 4):

“Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally. Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian digital society’s transformation.”
On Vista’s Rs 11,367 crore investment (May 7):
“Like our other partners, Vista also shares with us the same vision of continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians. They believe in the transformative power of technology to be the key to an even better future for everyone. In Robert and Brian, whose family hails from Gujarat, I found two outstanding global technology leaders who believe in India and the transformative potential of a Digital Indian Society. We are excited to leverage the professional expertise and multi-level support that Vista has been offering to its investments globally for the benefit of Jio.”
On General Atlantic Rs 6,598.38 crore investment (May 17):
“I have known General Atlantic for several decades and greatly admired it for its belief in India’s huge growth potential. General Atlantic shares our vision of a Digital Society for India and strongly believes in the transformative power of digitisation in enriching the lives of 1.3 billion Indians. We are excited to leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing for the benefit of Jio.”
On KKR’s Rs 11,367 crore investment (May 21):

“KKR shares our ambitious goal of building a premier Digital Society in India. KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years. We are looking forward to leveraging KKR’s global platform, industry knowledge and operational expertise to further grow Jio.”
On Mubadala’s Rs 9,093.60 crore investment (June 5):
“I am delighted that Mubadala, one of the most astute and transformational global growth investors has decided to partner us in our journey to propel India’s digital growth towards becoming a leading digital nation in the world. Through my longstanding ties with Abu Dhabi, I have personally seen the impact of Mubadala’s work in diversifying and globally connecting the UAE’s knowledge-based economy. We look forward to benefitting from Mubadala’s experience and insights.”
On Silver Lake’s & co-investors additional Rs 4,546.80 crore investment (June 5):
“Silver Lake and its co-investors are valued partners as we continue to grow and transform the Indian digital ecosystem for the benefit of all Indians. I would like to emphasise that Silver Lake’s additional investment in Jio Platforms, within a span of five weeks during the Covid-19 pandemic, is a strong endorsement of the intrinsic resilience of the Indian economy, which will surely grow bigger with comprehensive digital enablement.”
On ADIA’s Rs 5,683.50 crore investment (June 7):
“It is a delight that ADIA, with its track record of more than four decades of successful long-term value investing across the world, is partnering with Jio Platforms in its mission to take India to digital leadership and generate inclusive growth opportunities. This investment is a strong endorsement of our strategy and India’s potential.”

On TPG’s Rs 4546.8 crore investment (June 13):

“We have been impressed by TPG’s track record of investing in global technology businesses which serve hundreds of millions of consumers and small businesses, making the societies we live in better.”

On L Catterton’s Rs 1894.50 crore investment (June 13):
“I particularly look forward to gaining from L Catterton’s invaluable experience in creating consumer-centric businesses because technology and consumer experience need to work together to propel India to achieving digital leadership.”  

The Future is a Roadmap
Having overcome immediate competition in India last July, Ambani dropped clear hints of what was to come next.

Addressing shareholders at the annual general meeting last August, Ambani declared that RIL would induct leading global partners in Jio and Reliance Retail over the next few quarters and move towards listing of the telecom and retail business within five years. “We have a very clear roadmap for becoming a zero net debt company in next 18 months,” Ambani had said then.

In a research report, KR Choksey Shares & Securities says, “RIL is moving towards its corporate goal of balance sheet deleveraging through strategic stake sale in Jio Platforms and the successful rights offer of around Rs 53,000 crore.”

The firm expects RIL to continue to attract a mix of strategic and long-term investors through strategic business combinations and equity sales that deleverage its balance sheet.

RIL is also reportedly planning for a potential global markets listing (Nasdaq) in FY21. “The presence of these strategic and long-term investors would help RIL list Jio at an attractive valuation and create value for existing shareholders,” the analysts added.

Macquarie Research said the recent transactions show that “RIL is indeed well on its way to meet its zero-debt target ahead of schedule”.

RIL Is Invested In Several Tech Trends

* Company has built and acquired portfolio of platforms in Artificial Intelligence, Natural Language Processing, NB-IoT, Edge Computing, AR/VR & Mixed Reality etc.
* Platforms provide tech-backbone for various product suites with significant cost advantage.
* RIL acquired and developed various technology driven platforms include:

1. Reverie (NLP)
2. Radisys (5G/IoT)
3. Embibe (AI ed-tech)
4. Tesseract (AR/VR/MR)
5. Haptik (AI)
7. EasyGov
8. C-Square
9. Sankhya Sutra
10. RIL has also invested in various collaboration tools.

Axis Capital says these deals are just the beginning. “We expect many such marquee deals in the next year or two, as this route provides much needed capital and advanced technologies.”

“While partnership with Facebook can help Reliance Jio monetize customers through non-telco revenue streams, investments by Vista, Silver Lake, General Atlantic and KKR will provide further cash for deleveraging. Moreover, investments have also improved RIL’s cash flow, thus accelerating overall deleveraging initiatives”, Axis Capital added.

Reshaping the Landscape

With deleveraging done and a robust balance sheet in place, how will Jio go about its plan of reshaping India’s digital business landscape? How will it converge consumers on to a new platform that subsumes connectivity, content, and commerce into a single offering?

Jio is perhaps the only company in India that is well placed to achieve this vision and there is a clear consensus amongst analysts about the potential of the

Jio-Facebook partnership.

In a research note, BofA Securities said it considers the Jio-Facebook deal as a “game-changer” as it re-emphasizes the point that Jio is a digital company rather than a telco.

“We estimate RIL to eventually service 500 million mobile users, over 10 million broadband households and a similar number of small and medium enterprises.”

BofA Securities expects Jio and Facebook to collaborate and “launch a super-app to service a large market without violating net-neutrality and data privacy norms”.

“There is no other market in the world that offers the potential that India does for Facebook, which owns WhatsApp and Instagram. It is without question very smart of Mark Zuckerberg and other investors to invest in Jio,” says Aman Kapur, a Silicon Valley based analyst.
Unlocking a $2 trillion Market

Global research firm Sanford Bernstein says Reliance Jio and Facebook are building an ecosystem of 10 key services, with each big enough (a total addressable market of over $5 billion) to provide important and discrete services to the consumer. According to the firm, the core services of the platform are retail and commerce ($1.3 trillion), payments ($700 billion), content, advertising, others ($70 billion) with an overall potential addressable market of over $2 trillion by 2025.

Bernstein endorses Jio’s platform approach. “India has the second largest Internet users (over 600 million), the fastest growing e-commerce segment (over 30 per cent CAGR), second largest smartphone users (over 700 million), deep payments network (1.5 billion transactions per month). A platform approach can unlock the digital ecosystem.”

The firm believes that Jio and Facebook’s presence in retail, telecom, over-the-top (OTT) and fintech, WhatsApp Pay has profound implications on the competitive landscape in India across the digital market opportunity.

“Jio has a 31 per cent share in telecom, Jio OTT apps such as Jio Cinemas, Reliance has a 45 per cent share in organized retail and ecommerce. Jio Saavn, Jio TV have a 36 per cent market share in terms of number of monthly average users (MAU) in May 2020. WhatsApp Pay has around 10m users its initial phase of rollout,” it added.

JioMart, Jio Money, Jio Group Talk

A Jio and WhatsApp combination is extremely potent as it will have access to hundreds of millions of potential customers.

JioMart would act as the inventory and back-end supply chain for mom and pop shops. Customers would place the order through WhatsApp and the payments would be made through a wallet. Experts say that there is a good headroom for growth and scope for market share gains in the retail sector.

JioMart, which is Reliance Retail’s offline-to-online (O2O) ecommerce platform (under pilot in select areas of Mumbai) aims to onboard millions of local offline merchants, kirana stores to its entire retail ecosystem enabling last-mile delivery through these outlets.

The pilot has now moved into its next phase through a strategic partnership with WhatsApp enabling customers to order groceries via messaging through a dedicated


Mark Zuckerberg, CEO, Facebook

There's a lot going on in the world right now, but I wanted to share an update on our work in India. Facebook is teaming up with Jio Platforms — we're making a financial investment, and more than that, we’re committing to work together on some major projects that will open up commerce opportunities for people across India.

India is home to the largest communities on Facebook and WhatsApp, and a lot of talented entrepreneurs. The country is in the middle of a major digital transformation and organisations like Jio have played a big part in getting hundreds of millions of Indian people and small businesses online.

JioMart Chatbot on WhatsApp.

In addition, a dedicated ecommerce portal ( catering to 200 towns was launched in the last week of May.

Jio Money ( is expected to go commercial shortly. The service, which is a semi-closed prepaid wallet for mobile-based transactions, is available for download on Google Play Store. This is one of the crucial tentpoles in Jio’s strategy to focus on the estimated 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector across India.

Another initiative which is in the works is Jio Group Talk, a video conferencing service, which can connect to a 100 people in one go. This product is currently being used internally within the company and is likely to be offered soon to customers.  

Next Up: 5G
Whenever the government auctions fifth generation (5G) spectrum, Jio will be very well placed to participate in the auction. The company has already created the technology backbone to offer 5G services and sources say that it has done testing on a pilot basis. “All we would have to do is to install electronics on 270,000-odd towers. We are absolutely ready to participate,” sources said.  

In 2019, RIL became the first Indian company to cross Rs 10 trillion market capitalisation. RIL’s website carries a quote from Ambani that sums it up perfectly. “In just four decades, RIL has grown from a small startup to one of the largest, most admired companies in the world.”
Jio has taken just four years to make an even bigger mark.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Siddharth Zarabi

The author is a Senior Journalist and Macro-Economic Policy Expert.

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