From an initial investment of Rs. 45,000 crore towards Reliance Jio,
Mukesh Ambani led Reliance Industries Limited (RIL) has increased the investment amount by Rs. 15,000 crore, bringing it up to a total of Rs. 60,000 crore. This investment amount will be used to broaden the wireless network of Reliance Jio.
RIL’s telecom and digital services arm, Reliance Jio is expected to launch its 4G services later this year. Approximately 1.5 million users have availed of the preview version of its telecom services, including stakeholders, employees, and vendors.
Jio Services
The current equity will be increased by way of a rights issue. The decision of increasing the investment was taken following RIL’s impressive performance during the first quarter. The amount will help towards ensuring that Reliance Jio can comprehensively offer its services across India. Jio’s network covers about 70% of India presently, a number that is expected to rise up to 90% soon.
The commercial launch will allow customers in India to use the fully-functional 4G network. Anshuman Thakur, Head of Strategy and Planning, said that the company is steadily evaluating all its launch options and will soon be completely ready and operational.
Recently, the network witnessed over 26GB of data usage per user on a monthly average which is expected to rise further.
Investment in Jio
Through a combination of debt (Rs. 47,000 crore), spectrum payments (Rs. 14,000 crore), equity (Rs. 45,000 crore), and vendor financing (Rs. 28,000 crore), Reliance Industries Limited (RIL) has generated Rs. 1.34 trillion for Jio already.
Reliance Jio has employed the use of 270,000 km long fiber optic cables to extend its fourth-generation (4G) wireless network. This is supplemented by the creation of 92,000 network towers. RIL has spent almost Rs. 35,000 crore on creating the supportable infrastructure for Jio, which includes the aforementioned towers and fiber network. The company has also spent Rs. 50,000 crore to acquire spectrum, and another Rs. 40,000 crore towards physical assets.
The July report of Motilal Oswal Securities Limited stated that they expect Reliance’s investment to go beyond Rs. 1.5 trillion by the time of Jio’s network launch. Another report, by Edelweiss Securities, states that by the end of 2016-17, they expect Reliance Jio to have exhausted the planned capital expenditure which amounts to Rs. 1.5 trillion while also managing to cover 90% of India.
Strategy and future plans
A company spokesperson stated that Reliance Jio does not aim at differentiation based on pricing but aims to lure consumers with its value offerings. The increase in the sales of LYF smart phones equipped with LTE (long-term evolution) technology is expected to create opportunities for Jio 4G services.
Reliance Retail is offering its LYF FLAME series of smart phones at discounted prices, making them even more affordable. The company is also expanding its potential customer base by partnering with Samsung smart phones. On purchase of select Samsung models, users will receive free Jio services for three months.
Summary
Reliance Industries Limited (RIL) increases its investment in Reliance Jio by Rs. 15,000 crore which will help Jio to expand its geographical network connectivity.