Diversifying Saudi Arabia invests $1.5 bil. in India's Jio Platforms

19, Jun. 2020

Bengaluru, Kartanata, India (Photo by Andrea Leopardi on Unsplash)
Bengaluru, Kartanata, India (Photo by Andrea Leopardi on Unsplash)

NEW DELHI, NNA - India’s telecom and digital services firm Jio Platforms Ltd. has raised 113.67 billion rupees ($1.5 billion) from Saudi Arabia’s sovereign fund, bringing its total fundraising to $15.4 billion in the last two months.

The investment by the kingdom’s Public Investment Fund (PIF), its largest in India so far, will give it a 2.32 percent stake in the unit of Reliance Industries Ltd. (RIL), said the Mumbai-based company in a statement on Thursday.

Jio Platforms, a wholly-owned subsidiary of the oil-to-retail-to-telecom conglomerate, has now sold 24.7 percent stake to an assemblage of high-profile buyers including Abu Dhabi's Mubadala Investment Co., Abu Dhabi Investment Authority and Facebook Inc.

They believe the young next-generation digital firm of billionaire Mukesh Ambani is well-poised to conquer India’s booming internet market after having captured a wireless telecom subscriber base of roughly 400 million.

In a joint press release, PIF said its Jio investment is in line with its strategy of investing in sectors and companies that would generate long-term returns as Saudi Arabia diversifies away from oil in an economic transformation to meet its Vision 2030 objectives.

Yasir Othman Al-Rumayyan, governor of PIF, said, "We are delighted to be investing in an innovative business which is at the forefront of the transformation of the technology sector in India. We believe that the potential of the Indian digital economy is very exciting and that Jio Platforms provides us with an excellent opportunity to gain access to that growth."

The investment will also enable PIF to "generate significant long-term commercial returns for the benefit of Saudi Arabia’s economy and our country’s citizens, in line with our mandate to safeguard and grow the national wealth of the Kingdom,” added Al-Rumayyan, who is also the chairman of Saudi Arabian Oil Co.

Welcoming PIF as a partner in Jio, Ambani, who is chairman and managing director of RIL, said, “We at Reliance have enjoyed a long and fruitful relationship with the Kingdom of Saudi Arabia for many decades. From oil economy, this relationship is now moving to strengthen India’s new oil (data-driven) economy, as is evident from PIF’s investment into Jio Platforms. I have greatly admired the defining role PIF has played in driving the economic transformation of the Kingdom of Saudi Arabia."

Meanwhile, Bernstein analysts have predicted that Jio Platforms is likely to capture 48 per cent of Indian mobile subscriber market share by 2025 with over half a billion users.

In its report on Wednesday, Bernstein projected its mobile subscriber base to enlarge to 500 million in fiscal year ending March 2023 (FY2023), up from 388 million in FY2020. Subscriber numbers are expected to hit 569 million in FY2025 and then 609 million in FY2028.

"At our last model update in December, we proclaimed Reliance Jio the new king of Indian telecommunications. Since then, we have seen a multitude of international investors reach the same conclusion," said Bernstein analysts, whose report was published by various news outlets.

The research firm also expects Jio Platforms to launch an initial public offering (IPO) sometime over the next few years as its market share approaches 50 per cent.

It said, "By then ARPUs (average revenue per user) will have improved and we expect service revenue will double over the next three years."