As the world stares at an impending and prolonged recession period, tumbling growth, and the worst economic slowdown in 30 years, there is one company that nevertheless continues to attract a chain of foreign investors.
Jio, a company that has disrupted marketplaces and revolutionized the Indian digital economy since the very day of its inception has successfully managed to steal a bit of attention from the raging pandemic as well. This article explores the tryst between Jio and data against the backdrop of a highly underutilized Indian digital marketplace. It digs deeper into how Jio has successfully tapped into the data economy particularly owing to its strategic prowess.
It All Traces Back To The Beginning
When Mukesh Ambani launched this ambitious and disruptive company, he had a lot more than telecom in mind. In 2016, Jio stepped into a moderately populated telecom industry and entirely shapeshifted it. It metamorphized the digital game and exposed itself to the predatory scrutiny of various telecom groups. It left the incumbents with only two resorts, mergers, or a clean exit. Bharti Airtel, Idea, Vodafone, Aircel, BSNL, and Telenor were the incumbents that suffered the blows inflicted by a company that articulated its own trajectory. Tariff Wars and a fiercely competitive framework ruled the market leaving the only major players to be Bharati Airtel and Jio along with idea Vodafone that is currently reeling under debt.
The making of this company was not an overnight decision or a startup in a garage. It was well thought of. It came with a clear future vision and calculated risk assessment. Jio entered the market with a next-generation all IP data network and 4G LTE Tech, thus enabling pan India connectivity. It, of course, had the undue advantage of building a completely new 4G network as opposed to other telecoms that upgraded their existing 2G and 3G networks.
Jio enticed the Indian public with lucrative deals and data plans for close to zero cost. This caused a seismic shift in the way Indians looked at data. Jio was victorious in labeling data as a necessity instead of a luxury. It normalized data usage and made it accessible to the average Indian. Now Rahul could stream his favorite movie while on his metro ride home and Naina could download songs without having to worry about anything other than her phone storage space.
Consequently, India became the world's largest consumer of mobile data. Before the entry of Jio, the average cost for 1 GB data was roughly close to 250 rupees. Now it has come down to meager 18 rupees. Jio Boasts of a subscriber base of 388 million. This would imply that the number of people that use services of the telecom exceeds the entire population of the US. No wonder Jio is the leading player, both in terms of market share and revenue.
What Does Data Have In Store For Jio
From ordering a meal to driving to a place, every activity that you engage in leaves a digital trace. Now the question is not how but why data has emerged to be as valuable or perhaps more valuable than oil itself.
No service or product comes for free. At the focal point of the data economy lies the consumer that in lieu of services, hands over important data. Data that has made tech giants like Google(Alphabet), Facebook, and Microsoft among the most valuable listed companies.
Data is both the end and the means to facilitate a bigger plan. As more and more people subscribe to a service, it gives the company access to new datasets and these help them in targeted advertising and product designing alongside strengthening the wave of curiosity around the service. This further ensures that more people sign up, yet again helping the company to reach out to more people. It is an endless cycle of wining fueled by ubiquitous data.
“For Reliance… data is the new oil, and intelligent data is the new petrol” states Ambani whose net worth now surpasses Tesla founder Elon Musk. It isn’t a mere coincidence that Jio spent 4 years building a network that familiarized and exposed the masses to the online space. While some jeered at this drastic and daredevil move, some could unearth the underlying strategy. The idea was not just to attract and entice people with lucrative deals and expand user database rapidly. Jio had the future in mind. The idea was to build the pipe and then to control what flows through it (products and services). It would serve as the perfect platform to market other RIL ventures, be it in media, digital, entertainment, or retail thus enforcing brand recall and propelling overall growth.
The real question was the number of users Jio will retain after it switches over to paid services. Ambani knew what was at stake and delivered what no one expected, but just what everyone needed. The data pack cheaper than your local ‘Vada Pav’ analogy made the intended impression and the rest is history.
Why Are Investors Flocking To Jio In the Middle Of A Pandemic?
For long, RIL has dominated the energy and chemical sector of the country but with the current economic slowdown, it realizes the urgent need to move towards a phygital set up with data and technology being the holy grail. As reliance reversed oil to form the logo for Jio, it also switched from oil to data mining. The reason why US tech giants are interested in this Indian enterprise is multi-faceted and manifold. The first and foremost is the fact that the Indian economy is the most promising market ground closely after china. The world's fastest-growing telecom with a chairman who is the richest Asian also means a company that is willing to risk for bigger gains. It means a company that builds itself on the image of a homegrown brand. When Mukesh Ambani directly pitched his company to US President Donald Trump and asked the US to invest solely because they “do not have a single Chinese component”, the intention was crystal clear. With the Make in India sentiment reinforced by the LAC troubles, this time seems like the perfect opportunity for Jio to capitalize on its gargantuan investments and to finally monetize them.
Jio has been competing with rivals in every sector possible. However, as a budding company that boasts of understanding its population, it has a cutting edge over foreign giants. This can also be a reason for billion-dollar companies like Facebook and Google to invest heavily in Jio and Jio platforms.
India manages essential components of the country data infrastructure through Aadhar, thus imposing some sort of curb on the activities of these tech giants and enforcing antitrust policies more vehemently than any other country. Jio, time and again, has reiterated that data of Indians is a national resource and an optimal opportunity for homegrown firms to tap into.
As the Indian government looks to reinforce protectionist laws, data colonialism will be heavily challenged. With Facebook struggling with WhatsApp pay and Google facing antitrust issues, these giants realize that the only way to tie themselves to this booming economy is through the cover of an Indian company that is capable of diversifying its operation and channeling its resources. Connectivity is just a lubricant and the Jio ecosystem has much more to offer. With a debt-free structure, excellent brand image, and constant growth record, Jio sure seems to be a promising bet that has always been in the good books of the government.
Facebook now owns nearly ten percent of the 65 billion internet biz that is supposedly an investor's favorite. Jio plans to divest nearly 20 percent stake in Jio platforms, and for two reasons. One, it would help them reduce the overall net debt burden. Second, Jio has always been known for strategic investments and associations. The recent acquisitions like music streaming Saavn, AI-enabled Haptik, learning platform Embibe among others bear witnesses to the underlying resolution. In recent years, RIL spent nearly $3 billion in acquisitions. According to Morgan Stanley Research, “The acquisitions reflect its ambition to disrupt the consumer space through the use of technology.”
In fact, the recent launch of Jio mart, in association with Facebook’s WhatsApp is a masterstroke. Using the mere exposure effect, Ambani wishes to connect customers to Kirana stores and in the process gain insight into the data set of the rural-urban e-commerce class. This would mean the exploration and knowledge of data hitherto unknown. By using something familiar like WhatsApp, he ensures that engagement and adoption rates would only increase.
Thus, it comes off as no surprise why RIL backed Jio, and not Tata or Birla made it to the top. Even in the middle of a pandemic, this company goes on to bag a string of strategic investments. It is difficult not to brag about how this company has transformed the digital landscape of our country. From a weak link to a battleground for investors, Jio has changed the Indian digital way of life. As Jio looks to expand and diversify operations, its partnership with Google and Facebook has more to it than the naked eye can uncover. The plan is to capitalize on both technology and reach to shell out their 5-G network. The plan is to come up with an entry level affordable Smartphone in association with Google. Jio vouches for a 2-G ‘mukt’ India and is already on the path of deliverance. As the world’s most valuable resource is now found in households instead of mines, this company knows all too well about bringing it to the forefront. As technology and AI promise to extract more and more conclusions and inferences from consumer data, it is safe to say that Data holds the answer to every question asked and to every question yet unknown and it seems like Jio is not unaware.
References
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Reuters. (2020, June 4). Why investors are betting big on Mukesh Ambani’s Reliance Jio. Here are 4 factors. Available at: Livemint. https://www.livemint.com/companies/news/why-investors-are-betting-big-mukesh-ambani-s-reliance-jio-here-are-4-factors-11591232563843.html
Inside Jio’s billion-dollar deals: Why investors are flocking to Mukesh Ambani’s $65B internet biz. (2020, May 28). Available at: YourStory. https://yourstory.com/2020/05/jio-billion-dollar-deals-investors-mukesh-ambani-internet-biz
Staff, S. (2020, July 16). Explainer: Why Google and Facebook are investing in Mukesh Ambani’s Reliance Jio. Available at: Scroll.In. https://scroll.in/article/967618/explainer-why-google-and-facebook-are-investing-in-mukesh-ambanis-reliance-jio
Moharkan, F. (2020, June 18). DH Deciphers | Why are investors pumping so much money into Jio amid pandemic? Available at: Deccan Herald. https://www.deccanherald.com/business/business-news/dh-deciphers-why-are-investors-pumping-so-much-money-into-jio-amid-pandemic-850882.html
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