Google invests $4.5 bn in Jio for 7.7% stake

Reliance Industries (RIL) Chairman Mukesh Ambani on Wednesday announced a strategic partnership with Google and development of in-house 5G solutions, in a bid to win over new customers and create a platform for future growth.

Google will invest ~33,737 crore for 7.73 per cent stake in Jio Platforms. The two companies will collaborate for the development of entry-level affordable 4G and 5G smartphones as well as Android-based operating systems, Ambani announced during the virtual annual general meeting (AGM).

“Our investment of $4.5 billion in Jio is the first — and biggest — that we will make through this ($10 billion) fund. I am excited that our collaboration will focus on increasing access for hundreds of millions of Indians who don’t own a smartphone, while improving the mobile experience for all at the same time,” said Google CEO Sundar Pichai in a video message.

With the latest investment, Jio has raised ~1.52 trillion, selling 32.97 per cent stake to 14 investors including Facebook, private equity (PE) firms and sovereign wealth funds in the process.

While the investments from PE firms and wealth funds were made at a valuation of ~4.91 trillion, Google’s stake purchase values Jio at ~4.36 trillion.

Jio disrupted the telecom market with its ultra-cheap data plans after its launch in 2016, and is now preparing for the next level of growth. Its strategy includes acquiring 300 million 2G network users by offering them affordable phones and launching new products for connectivity and entertainment. At the AGM, RIL announced Jio Glass, a mixed reality application for office meetings and education. The operator is developing in-house solutions for a 5G roll-out. “This will enable us to launch a world-class 5G service using 100 per cent homegrown technologies. This Made-in-india 5G solution will be ready for trial as soon as the 5G spectrum is available, and could be ready for field deployment next year,” said Ambani.

Even though no date has been fixed for the 5G spectrum auction, the development gives Jio a head start over peers. This assumes significance, given the ban on Chinese firms Huawei and ZTE by the US and UK. India is also assessing whether or not to allow Chinese firms to participate in 5G trials.