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<ul><li>RCom made an early bet on CDMA technology which went out of style, while Jio chose LTE technology of 4G. </li><li>Mukesh spent massively on country-wide fibre networks, yet he is cognizant of the risks that a massive debt at the group level.</li><li> The plan to list Reliance Retail and Reliance Jio in the next five years will complete the circle of deleveraging giving his telecom venture a longer lifetime than RCom.</li></ul> It is a truth commonly acknowledged that Anil Ambani has run up debts he could not service. That is especially true with the ₹46,000 crore that <a href="https://www.businessinsider.in/anil-ambanis-rcom-to-go-through-bankruptcy-process-with-nclt/articleshow/69228691.cms">sunk his company</a>, Reliance Communications (RCom). A bet on the wrong technology meant extra investments, which coincided with the global economic slowdown, and piled debt so high, the risks of which were ignored at its peril. Now, RCom is facing bankruptcy proceedings and Anil’s brother Mukesh Ambani’s Reliance Jio seems to be thriving. The only difference is Mukesh seems determined not to repeat the mistakes of the past, both his own and that of his brother, with Jio. Betting on a technology that soon went out of fashion RCom had early on bet on an obsolete-to-be technology, which became its undoing. In the early 2000s when Airtel and Hutch (later Vodafone) went with GSM technology, both Tata Teleservices and RCom went in for CDMA technology, which users did not fancy. “I doubt if that could be termed as a mistake as many countries were using the technology but the world just went another way,” Alok Shende, Managing Director of Ascentius Insights, a management consulting firm tells Business Insider India. Years after RCom came under Anil Ambani, as <a href="https://www.indiatoday.in/business/india/story/ambani-vs-ambani-when-brothers-broke-up-150083-2011-12-27">Reliance Industries was divided </a>in 2004, he had to shift to the much-popular GSM technology. The shift required one more costly one-time investment in terms of network upgrade and spectrum; and the timing wasn’t right either. Mukesh Ambani has stepped with Jio, which started out on LTE technology of 4G. And he is not stopping at that. “Because of our early adoption of the ongoing enhancements to LTE technology our wireless network is already 4G PLUS. And we can upgrade this to 5G at minimum incremental cost,” he promised his shareholders at his annual general meeting this month. Jio fibre cable will deliver high-speed Internet right to homes and this will kickstart yet another set of services without having to fork out extra for spectrum. Telecom tariff war-- then and now Jio is currently waging a bitter price war in the telecom market. However, it is nothing new. A raging telecom price war started by Tata Teleservices in 2008 with one paisa per second plan, had hurt many others <a href="https://www.livemint.com/Home-Page/vaUfK95QU2z2cInvqWBv2I/RCom-sets-1-paisa-SMS-fee-extends-the-tariff-war.html">including him</a>. However, the shift from CDMA to GSM soaked in a lot of fresh investment that RCom could have spent to survive the price war. There are times when investments are affected the broad economic conditions. RCom’s second round of investments was followed by a global credit crunch after the Lehman Brothers’ collapse in September 2008, which made debt expensive and business extremely difficult. Debt is not bad, high-cost debt is. What is worse is to binge on it. Jio too has piled on a massive debt in rolling out its services and burning cash offering discounts and ultra-cheap tariffs to lure over 330 million customers in the first three years of its operations. The tariff attack <a href="https://www.businessinsider.in/details-of-jio-fibre-new-tariff-plan/articleshow/70639942.cms">continues with Jio Fibre</a>, too as the company speeds to acquire 500 million subscribers, but there is a difference between the Ambani brothers. One woke up to the debt pile on time, the other didn’t Mukesh spent massively on country-wide fibre networks and is bleeding his competitors. Yet, he is cognizant of the risks that a debt of ₹2.8 lakh crore at the group level poses. In a timely move, Reliance Industries (RIL) announced that it would sell 20% stake in its oil-to-chemicals business to Saudi Arabia’s state-owned Aramco, the world’s largest oil producer, for $15 billion. Not just that, he plans to turn RIL into a zero net debt conglomerate by March 2021. Within the telecom business too, he brought in Canadian fund Brookfields which invested ₹ 25,215 crore in the towers unit. The plan to list Reliance Retail and Reliance Jio in the next five years will complete the circle of deleveraging giving his telecom venture a longer lifetime than Anil’s RCom. “It is a very classic Reliance way of doing things which is vertically integrated model. And, the results will play out in the next 5-10 years,” Shende said about Mukesh’s plan to retire debt early. It will allow Jio to focus on adding services, like it already plans to, and bring its A-game to the tight race in telecom with Airtel and Vodafone Idea. “Jio will look at massive dominance in many areas like entertainment, e-commerce, Internet Of Things and will get more aggressive,” says Kunal Bajaj, a top telecom expert and consultant.

Mukesh Ambani's strategy with Reliance Jio is avoiding Anil Ambani's mistakes with RCom

<ul><li>One of India's biggest conglomerates is changing character adapting to the compulsions of the digital age.</li><li>Satya Nadella's appearance was the big surprise at the AGM as Microsoft and Mukesh Ambani joined hands to take on Jeff Bezos' Amazon in areas like cloud computing and targeting small businesses for digital transformation.</li><li>RIL was already shifting focus to its consumer businesses like retail and telecom, but now it is aiming for large scale integration of interests wherever possible.</li><li>Money coming in from Aramco and BP will give RIL more muscle to aggressively take on incumbent telecom players like Airtel and Vodafone-Idea in not just mobile telephony but also in fixed line broadband, Jio Fibre, that will be launched on September 5.</li></ul>All eyes were on Mukesh Ambani today (August 12) who delivered his speech at Reliance Industries' 42nd Annual General Meeting (AGM). Here are the top ten takeaways from a historic speech that laid out the path for the transformation of one of India's biggest and fairly old conglomerate: 1. A $15 billion cash-out Saudi Arabia's state-owned oil producer, Aramco, will buy 20% stake in the Indian behemoth's oil-to-chemicals business, valuing the unit at $75 billion. This would make the investment from Aramco in RIL at about $15 billion. This partnership will be across refining and petrochemical assets. The Saudi government owned oil major will also supply 500 barrels of day crude oil to RIL’s Jamnagar refinery. “This signifies perfect synergy and world’ largest integrated refinery and petchem complex,” Ambani said. 2. More money, less debt Reliance Industries has a huge debt of about $21 billion. This has been a huge concern for investors lately which led to a fall in the stock price in the last few months. However, Ambani declared that the net debt will be zero by March 2021. The company has cash and cash equivalents of about $19.5 billion and another $15 billion from Aramco will help the company retire its massive debt. RIL will also get another $1 billion from its joint venture with BP. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 3. Reliance Jio and Reliance Retail will be spun out Reliance Jio and Reliance Retail will be listed in the next five years, Mukesh Ambani told his investors. "There has to be an 18-month gap between the two listings, and therefore the five-year timeline may be crunched to 3 years," an analyst, SP Tulsian, explained on CNBC-TV18. 4. Satya Nadella comes for a cameo, but is here to stay The surprise guest at the AGM today was global tech icon Satya Nadella, the Chairman of Microsoft, who joined the RIL AGM. Microsoft and Reliance Industries have joined hands to take Jeff Bezos' Amazon head on. 
	
 
 
 
 
 
 
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 "It is imperative to develop a nation-wide cloud infrastructure which is at the same time cutting-edge and affordable," he said. Microsoft will bring Azure into Jio data centres. Small businesses can get the voice/data services, marketing and sales solutions and all Microsoft tools package at a starting price of ₹1,500 a month. 5. The threat to Jeff Bezos Microsoft's tie-up with Jio will, probably, be the biggest challenge for Jeff Bezos in one of the world's biggest markets, India. Reliance will offer end-to-end digital stack to "enable and empower" small merchants currently at the mercy of other online retail platforms like Amazon and Flipkart (now owned by Walmart). This stack will include a point-of-sale payment device, which could be a $900 billion market, according to Jal Irani, analyst at Edelweiss Financial Services. 6. Once an oil giant, now immersed in technology Ambani's plan for digital transformation is that of convergence with the physical world. Reliance Industries plans to take long strides in spaces like 'Internet of Things' (IoT), cloud computing and a broadband ecosystem. So far, Jio had only one revenue stream, and now there will be four more streams of revenue that will kick in from the current financial year itself. "Within another 2 years, there will be over 2 billion connected devices in India, and Jio aims to have half of those on its IoT platform. This will be a ₹20,000 crore revenue opportunity and the commercial ops will begin from January 2020," Ambani said. 7. <keyword id="7975366" type="UNKNOWN" weightage="20" keywordseo="jio-fibre-launch-date">Jio Fibre launch date</keyword> and tariff plan Jio Fibre will be availabe starting September 5, the third anniversary of Jio's launch, across India. The full network roll-out for Jio Fibre in the next year. After disrupting mobile telephony, Ambani is targeting the fixed line broadband. Of the total 240 million households in India, the broadband penetration in India is only about 10% right now. That leaves Ambani to fight a large under-served market without having to offer deep discounts. Jio will come bundled with most-premium OTT applications. Jio will also release movies on its platforms on the same day as the theatres. Jio Fibre users subscribing for 'forever annual plans' will get an 4K LED television and a 4K set-top box. 8. The difference between Jio mobile and Jio Fibre However, this time Jio does not seem to burn cash offering discounts to win over customers but is betting more on offering more value for a reasonable price. The plans will cost anywhere between ₹700 and ₹10,000 per month. Any voice call on Jio will be free forever. The fixed line international calls will be cheaper by up to 90% of the existing industry tariffs. Calls to US and Canada from India on Jio will cost only ₹500 a month. 
 
 
 
 
 
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 9. From content creator to content aggregator Jio seems to have changed focus from creating fresh content for its platform to building alliances with other OTT platforms. Ambani also revealed that Jio will be able to offer traditional TV channels to its customers. Earlier this year, RIL acquired controlling stakes in Hathway, Den and GTPL. Together, they give RIL access to 30,000 local cable operators. "We have designed a Jio set top box that will broadcast TV channels, for which the local cable operators will get a steady revenue. This set top box will be sold to all Jio Fibre customers," the RIL chairman said. Premium subscribers of Jio Fibre will also be able to watch newly-released movies at the comfort of their home on the day of their release in the theaters. This will be a huge setback for companies like Inox and PVR as Jio's offering may affect footfalls at multiplexes and box office collections too. 10. More bad news for Vodafone Idea and Airtel Jio's mobile phone services has about 340 million subscribers as of now. Ambani is targeting to take this number to over 500 million over the next few months. That would mean Jio will remain an aggressive player in the market and that's bad news for other players like Airtel and Vodafone Idea. Given that RIL is getting additional cash from Aramco and BP, and if it becomes a zero net debt company by March 2021, the company of its size and scale will only have more money to muscle out other players with its aggressive pricing. Other telcos are already in deep trouble after having fought Jio in the market for nearly three years with higher discounts, funded by higher debt. "Reliance Industries' stock may hit a new high, beating its previous high of about ₹1,400, in 2019 itself," SP Tulsian said. Expect a rally when the market reopens for trade on Tuesday (August 13). SEE ALSO: <a href="https://www.businessinsider.in/business/what-to-expect-from-mukesh-ambani-at-reliance-industries-agm/articleshow/70637794.cms" data-type="tilCustomLink" target="_blank"></a>

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Mukesh Ambani's strategy with Reliance Jio is avoiding Anil Ambani's mistakes with RCom

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