Reliance choose tech for growth; super-fast internet coming next month
The cloud services partnership with Microsoft Corp underscores Ambani’s ambitions to go toe-to-toe with Amazon.
Reliance Industries said it would launch super-fast internet in India next month, stressing that partnerships would be its path to growth as it announced a tie up with Microsoft and a stake sale in its oil unit to Saudi Aramco.
The group’s plans to launch fibre broadband is likely to worry rivals who are struggling to keep up with Jio, billionaire Chairman Mukesh Ambani’s telco upstart, which has upended the market with its cheap data plans and become India’s top mobile operator by subscribers in just three years.
The tech push and the planned stake sale comes as Reliance - India’s second-biggest company by market value - looks to bolster its consumer businesses and diversify from its core oil and petrochemicals operations.
The cloud services partnership with Microsoft Corp underscores Ambani’s ambitions to go toe-to-toe with Amazon, which offers cloud services in India and is also one of the country’s biggest online retailers.
“We have received strong interest from strategic and financial investors in our consumer businesses, Jio and Reliance Retail,” Ambani said in a statement for the company’s annual general meeting on Monday.
“We will induct leading global partners in these businesses in the next few quarters, and move towards listing of both these companies within the next five years,” he said.
The consumer-facing businesses collectively contribute nearly a third of the company’s consolidated EBITDA, Ambani said. Five years ago they contributed just 2 per cent and Ambani expects them to account for 50 per cent soon.
Ambani was joined by Microsoft Chief Executive Satya Nadella via video conferencing for the AGM being held on a public and stock exchange holiday in India and many countries.
Microsoft and Jio will launch cloud data centres in India, the two executives said. Jio will provide free cloud services for startups for as little as 1,500 rupees (USD 21) a month, which Ambani said was less than one-tenth of global rates.
“The strategy continues to be to grab a lion’s share of the market ... by integrating several channels of entertainment and communication,” said Hemant Joshi, a technology, media and telecom consultant at Deloitte.
“They seem to be doing once again here in broadband what they have done earlier in telecom,” he said.
Jio, which has over 340 million subscribers, said its GigaFiber broadband services will include access to television channels, fixed-line telephone calling and video conferencing with prices starting at 700 rupees per month.
Ambani, Asia’s richest man, said on Monday Reliance is planning to sell a fifth of its oil-to-chemicals business to Aramco in what would be one of the largest foreign investments in the country.
“We want to build transformative partnerships, whether it is the kirana (grocery) merchants in the new commerce space, or in the B2B space with giants like Aramco or BP,” said Reliance’s Executive Director PMS Prasad.
The company said earlier this month it would deepen its ties with oil major BP in forming a fuel retailing joint venture.
The stake sale and plans to bring in more investors for its consumer businesses is part of Reliance’s push to become a zero net debt company, which Ambani said will happen by March 2021.
Reliance had outstanding debt of nearly USD 42 billion as of June 30, and cash and cash equivalents of roughly USD 18.5 billion.
The deal with Aramco, which values the business at USD 75 billion including debt, also includes an agreement for Aramco to sell up to 500,000 barrels per day (bpd) to Reliance’s Jamnagar refinery in Gujarat.