Few thought it was possible, but billionaire Mukesh Ambani’s Reliance Jio has successfully upended the Indian telecoms industry. Barely three years after its launch, the upstart has now displaced Vodafone Idea to become the country’s top mobile operator by users, with 331 million subscribers. That milestone puts its parent conglomerate, $111 billion oil-to-retail Reliance Industries, on track to achieve a bigger aim: dominance over the country’s consumers.
Jio has led a wireless revolution. Voice calls are now free across top operators and India’s mobile data, once amongst the most expensive in the world, is now the cheapest: 1 gigabyte costs an average of $0.26 compared to China’s $9.89, according to a study by Cable.co.uk. Rock-bottom prices have battered rival operators, but have also enticed millions online, encouraging them to swap old feature phones for internet-enabled JioPhones, virtually given away. Today, India has the world’s highest data usage per individual smartphone.
Ambani’s next big push will be to make India one of the top three nations for fixed-line broadband penetration. That’s logical: people consume most data indoors. There is less to disrupt here, but plenty to build on, given India has barely 18 million wireline users. At this month’s annual general meeting, Reliance could announce plans to connect at least 50 million households – almost one in five.
Reliance is aiming to do more with that improved connectivity too, offering movies, music and e-commerce. The group is already the country’s top bricks-and-mortar retailer, and is snapping up content. The final result, financiers and industry watchers say, will be a company that looks something like a combination of U.S. telecom operator AT&T and Jeff Bezos’ Amazon.
Ambani’s ambitions beyond oil have not come cheap. Jio has cost almost $40 billion. Shareholders have been patient, perhaps encouraged by cash flows from the core business and Ambani’s push toward an asset-light model, selling off fixed assets like mobile towers to outside investors, including Canada’s Brookfield Asset Management. Reliance has also shone in other ways, delivering 143% total shareholder returns since Jio’s launch in September 2016, far ahead of other telcos and the benchmark index. There’s reason to hope for more.
