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The richest Indian has already signed 215 million customers in 22 months for its 4G mobile network. By reducing the profitability of the telecommunications industry with free voice calls and cheap data, he has forced many of his smaller rivals, including his younger brother Anil Ambani, to back down. That puts about 80 million subscribers at stake.
But it's Ambani's entry into fiber-optic broadband, announced at the annual shareholders' meeting of Reliance Industries Ltd., on Thursday, which will complete his plans of distribution. Anticipating a ruthless badault on JioGigaFiber, investors have abandoned rivals such as Hathway Cable & Datacom Ltd., Siti Networks Ltd. and Den Networks Ltd. and Sun TV Network Ltd.
Stock Reliance also weakens when shareholders attempt to badess the investment needed to support Ambani's ambition.
With an average income per user of less than $ 2 a month, even a country of 1.3 billion people can only generate $ 28 billion in revenue. As Nitin Soni of Fitch Ratings Ltd. points out, with 30% operating margins, this translates into a measly $ 8 billion Ebitda. Even if Jio doubled its revenue share by 20% to 40%, its Ebitda take would be $ 3 billion with a $ 36 billion investment. Something else has to click.
On Thursday, Ambani announced a plan to connect small retailers with a Jio-based technology platform that would in turn link the supply chain of its existing bricks. Mortar Reliance Retail Stores.
It is unclear whether households in the 1,100 cities where Jio wants to take his fiber network will stop watching a Bollywood movie on their Jio TV to order food products at their local store using voice commands … in Indian languages.
But Ambani will not humbly deliver India to Alexa. The czar of petroleum refining and petrochemistry may be a late entrant into the consumer game, but now that he is there he will go for the triple complete game.
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