India's Reliance to roll out fiber broadband, unveils oil stake sale to Aramco
Reuters
Published Aug 12, 2019 08:43AM ET
India's Reliance bets on tech for growth, announces stake sale to Aramco
By Promit Mukherjee and Alexandra Ulmer
MUMBAI (Reuters) - Reliance Industries said it would launch super-fast internet in India next month, stressing that partnerships would be its path to growth as it announced a tie up with Microsoft and a stake sale in its oil unit to Saudi Aramco.
The group's plans to launch fibre broadband is likely to worry rivals who are struggling to keep up with Jio, billionaire Chairman Mukesh Ambani's telco upstart, which has upended the market with its cheap data plans and become India's top mobile operator by subscribers in just three years.
The tech push and the planned stake sale comes as Reliance - India's second-biggest company by market value - looks to bolster its consumer businesses and diversify from its core oil and petrochemicals operations.
The cloud services partnership with Microsoft Corp (NASDAQ:MSFT) underscores Ambani's ambitions to go toe-to-toe with Amazon (NASDAQ:AMZN), which offers cloud services in India and is also one of the country's biggest online retailers.
"We have received strong interest from strategic and financial investors in our consumer businesses, Jio and Reliance Retail," Ambani said in a statement for the company's annual general meeting on Monday.
"We will induct leading global partners in these businesses in the next few quarters, and move towards listing of both these companies within the next five years," he said.
The consumer-facing businesses collectively contribute nearly a third of the company's consolidated EBITDA, Ambani said. Five years ago they contributed just 2% and Ambani expects them to account for 50% soon.
Ambani was joined by Microsoft Chief Executive Satya Nadella via video conferencing for the AGM being held on a public and stock exchange holiday in India and many countries.
Microsoft and Jio will launch cloud data centres in India, the two executives said. Jio will provide free cloud services for startups for as little as 1,500 rupees ($21) a month, which Ambani said was less than one-tenth of global rates.
"The strategy continues to be to grab a lion's share of the market ... by integrating several channels of entertainment and communication," said Hemant Joshi, a technology, media and telecom consultant at Deloitte.
"They seem to be doing once again here in broadband what they have done earlier in telecom," he said.
Jio, which has over 340 million subscribers, said its GigaFiber broadband services will include access to television channels, fixed-line telephone calling and video conferencing with prices starting at 700 rupees per month.
Get The News You Want
ZERO-DEBT BET
Ambani, Asia's richest man, said on Monday Reliance is planning to sell a fifth of its oil-to-chemicals business to Aramco in what would be one of the largest foreign investments in the country.
"We want to build transformative partnerships, whether it is the kirana (grocery) merchants in the new commerce space, or in the B2B space with giants like Aramco or BP (LON:BP)," said Reliance's Executive Director PMS Prasad.
The company said earlier this month it would deepen its ties with oil major BP in forming a fuel retailing joint venture.
The stake sale and plans to bring in more investors for its consumer businesses is part of Reliance's push to become a zero net debt company, which Ambani said will happen by March 2021.
Reliance had outstanding debt of nearly $42 billion as of June 30, and cash and cash equivalents of roughly $18.5 billion.
The deal with Aramco, which values the business at $75 billion including debt, also includes an agreement for Aramco to sell up to 500,000 barrels per day (bpd) to Reliance's Jamnagar refinery in the western Indian state of Gujarat.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.