Reliance Industries Ltd.’s (RIL) decision to set up a wholly owned subsidiary for digital initiatives is aimed at divesting stakes directly in this arm, in Reliance Jio or selling a portion of the assets of the former, a person in the know of the development told The Hindu.
Potential strategic and financial partners showed strong interest in the proposal after RIL CMD Mukesh Ambani hinted during the company’s AGM at inducting leading global partners in the consumer-facing businesses of the oil-to-retail conglomerate.
“We will induct leading global partners in these businesses (Reliance Retail and Reliance Jio) in the next few quarters, and move towards listing of both these companies within the next five years,” Mr. Ambani had said.
“Creating a separate digital platforms company and segregating it from Reliance Jio will help Reliance to sell strategic and financial stakes at two levels,” said the person. “One at the digital platform level, which holds all digital assets and another at Reiance Jio level.”.
When asked for comments, investment adviser S. P. Tulsian told The Hindu, “U.S. telecommunication majors AT&T and Verizon are yet to enter India which is one of the world’s largest telecommunications markets. “Reliance Jio will be an ideal opportunity for the U.S. majors to enter India,” he said.
Housing all apps
RIL’s digital platform will house all Jio apps, the company’s investment in digital platforms such as Den and Hathway cable and technical capabilities such as big data, artificial intelligence, blockchain, machine learning, Internet of Things and robotics.
To raise valuations, the digital platforms company and Reliance Jio will be virtually debt-free on the lines of global large platforms companies like Alphabet, Amazon, Facebook and Apple.
“Debt-free holding company with capital structure similar to global technology peers make it attractive for strategic investments [and] partnerships,” said RIL in a presentation to analysts.
“At the AGM, Mr. Ambani announced a partnership with Microsoft for digital transformation; I won’t be surprised if the technology major picks up direct stake in the digital platforms company or some of its digital assets going forward,” said a Mumbai-based analyst who didn’t wish to be named.
