Qualcomm has thrown its full weight behind Reliance Jio with $97 million investment equity to acquire 0.15% stake in the Indian telecom operator.
Reliance Jio has been ambitious in its quest to dominate the telecom industry in India. Its agility has attracted a lot of investment interests. It has raised more than $15.7 billion in four years, with Facebook being the highest stakeholder with $5.7 billion followed by Vista Equity Partners and Saudi Arabia Public Investment Fund who staked $1.5 billion respectively.
Qualcomm has become the latest to join the army of investors under Reliance Jio’s command. Qualcomm said its aim is to help Jio platforms “roll out advanced 5G infrastructure and services for Indian customers.”
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In less than four years, Reliance Jio has gained over 400 million users in India to challenge other big names in the telecom industry, including Bharti Artel and Vodafone Idea.
India is the second largest market for telecommunication in the world, and Reliance Jio has exerted dominance in the country by offering cut-rate voice and data plans. It has maintained Average Revenue Per User (ARPU) that equals those of its rivals and made it the most valuable company in India.
Reliance Jio also operates a number of digital services that includes music, live TV, movies streaming and the recently added video teleconferencing. These services have made it a darling to high profile investors like Facebook, Silver Lake, General Atlantic, Intel etc. selling 25.24% stake within a short period.
With the host of services in its domain, Reliance Jio has delved into 5G roll out and Qualcomm believes it has what it takes to offer the best services in that terrain.
Steve Mollenkopf, chief executive of Qualcomm is hoping to use 5G to give Indians a new set of experience.
“With unmatched speeds and emerging use cases, 5G is expected to transform every industry in the coming years. Jio platforms have led the digital revolution in India through its extensive digital and technological capabilities. As an enabler and investor with a longstanding presence in India, we look forward to playing a role in Jio’s vision to further revolutionize India’s digital economy,” he said.
Apart from its strategies that have attracted millions of mobile subscribers, Jio is believed to be enjoying special treatment from the government. Reliance Jio is owned by India’s richest man, Mukesh Ambani, who is a close friend to the ruling party. It is believed that his relationship with the authorities is driving a lot of investors to stake a claim in Jio, with the belief that it would lower the regulatory burden they currently face in India, according to investors who spoke with TechCrunch.
Another factor that has put not only Jio but also India on the spotlight is China’s trade war with the US that is gradually becoming a global crisis. Many companies are pulling out of China, and are looking at India as a destination.
On Monday, Google CEO Sundar Pichai announced a $10 billion internet investment in India. The plan is to make the internet affordable and to promote digital economy in India by enabling access to information in every Indian language via tech and the telecommunication industry.
“This is a reflection of our confidence in the future of India and its digital economy,” Pichai said in a statement. “India’s own digital journey is far from complete. There’s still more work to do in order to make the internet affordable and useful for a billion Indians … from improving voice input and computing for all of India’s languages, to inspiring and supporting a whole new generation of entrepreneurs.”
The $10 billion investment fund is aimed at improving the tech sector for the next five to seven years through a combination of equity investments, partnerships, and infrastructural development.
India’s internet population has topped over 700 million and there are yet many to be enrolled. With the recent interest in India, the country seems keen on using the opportunity to unseat China from its dominance position in the smartphone market. China dominates India’s smartphone market where Alibaba and Tencent are the biggest investors.
India’s Prime Minister Narendra Modi has been on ‘grow India campaign’, and the recent border conflict between India and China offers an opportunity for the country to implement its digital policies and limit reliance on Chinese firms.
The US chipmaker Qualcomm appears to have read the handwriting on the wall and moved into position to establish a robust digital network in India.
“Qualcomm has been a valued partner for several years and we have a shared vision of connecting everything by building a robust and secure wireless and digital network and extending the benefits of digital connectivity to everyone in India,” said Ambani.
I can not understand, how can 0.15% stake in an entity makes any impact? Please, I need further enlightenment.
0.15% of $1 trillion is a lot of money if you believe the company can hit that. If you have 0.1% of Amazon shares, you would be a multi-millionaire in dollars.