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Sunday 5 July 2020

Jio, with foreign buyers aplenty, raises Rs 60K crore

The company says it's a matter of pride if leading global investor companies are so enthusiastic about investing in Indian startups like Jio

Jio has raised about Rs 60,000 crore within three weeks through separate agreements with three companies including Facebook. According to sources, two more companies from Saudi Arabia and the US are preparing for huge investment in Jio.

In the midst of a crisis-ridden world economy due to the global coronavirus pandemic, business giants have reached the brink of bankruptcy. But Reliance Jio, under the leadership of Mukesh Ambani, is adding about Rs 20,000 crore to its coffers every week.

According to sources, American private equity firm General Atlantic may invest Rs 6,500 crore in Reliance Jio. The agreement is likely to be concluded by the end of May.

Sources say that Saudi Arabia Public Investment Fund (PIF) also wants to buy a small stake in Jio. General Atlantic and PIF have so far refused to divulge anything about it.

Sources in Jio say that Reliance is pursuing a long-term target. They say it is a matter of pride for the country and the company if the leading global investor companies are so enthusiastic about investing in Indian startups like Jio.

Facebook was the first to invest in Jio. After it put in Rs 43,500 crore, Silver Lake announced an investment of about Rs 5,000 crore. Vista has invested Rs 11,367 crore in Jio.

Experts say that the strategic investment of these companies will help Reliance Industries reduce its debt burden.

“Jio added 4.9 million active subscribers, improving its active subscriber market share to 31.4% (up 38 basis points month-over-month), while Bharti Airtel/Vodafone Idea lost 1.7 / 0.3 million active subscribers with market share down by 30/15 bps MoM at 31.7 / 30.1%,” Axis Capital said in a report.

Other telecom companies are but in the doldrums. Vodafone Idea has been losing active subscribers since May 2018 when its combined active market share stood at 42.2%, Axis said.

ICICI Securities said active subscribers net add is expected to remain volatile due to SIM consolidation on steep increases in tariff in December 2019, muted new active subscriber addition on lockdown, and non-availability of offline recharge from March 2020.

Mobile broadband subscriber base in January stood at 654 million, which is 66.3% of the total active base of 986 million.

Reliance Jio mobile user addition in January was flat sequentially due to strong growth by Bharti Airtel, which increased market share to 24.3%, up 34 basis points (bps). “Mobile broadband subs addition for Bharti was strong at 4.4 million, considering the tariff hikes and RJio’s reintroduction of unlimited off-net outgoing calls,” ICICI Securities said.

VIL’s broadband subscribers dipped by 0.5 million to 118 million; this was disappointing considering the expansion of its 4G network coverage and benefits of network integration,”” the brokerage said.

Jio though is still leading with a mobile broadband subscriber share of 52.8% while Vodafone Idea has 20.1%, down 43 bps on month, data showed. The brand has been ahead of the competition even in offering special packages to its subscribers to meet the challenge of social distancing during the nationwide lockdown to break the coronavirus infection chain.

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