Mukesh Ambani is the son of an Indian industrial family. The billionaire still controls Reliance Industries, the largest company in the country. The future, however, belongs to the mobile communications subsidiary Jio, with whom he is bringing high-speed Internet to the whole subcontinent at low prices.
How do you find the following mobile communications offer? For a one-time fee of 6.95 euros, you get 2 gigabytes of data volume per day for three months. Mukesh Ambani makes this possible in India.
The 63-year-old is currently the eleventh richest person in the world with a fortune of almost 80 billion dollars. He was born to be prosperous, Ambani was born in 1957 into a rich industrial family and still controls India’s largest company, the oil and petrochemical conglomerate Reliance Industries. About 20 years ago, however, he realized that the future is not fossil fuels, but data. That’s why he started one of the biggest bets in the world economy, took on huge amounts of debt through Reliance and built his cell phone subsidiary Jio out of the ground.
He bought a run-down telecommunications company in 2007 that had 4G licenses and has so far invested around $ 35 billion in building around 200,000 cell phone towers.”
400 million customers in four years
Almost ten years later, on September 5, 2016, Ambani’s mobile phone subsidiary Jio officially started working. After just one month, the newcomer had 16 million customers. A good four years later there are a good 25 times as many: According to the company, almost 411 million people use Jio in 2020 making Jio PAN India meaning operating across the whole of India. The result of a very aggressive price war, says Rappold. “Ambani offered phone calls free of charge. For the data he asked a ridiculous price of the equivalent of 15 cents for a gigabyte. Before that, that cost $ 4.50.”
The billionaire thought of his idea from the end, and the tech expert explained the principle. He wanted to win as many customers as possible as quickly as possible, not earn money. As the majority owner of the largest Indian company, he was able to rely on a reliable source of money. The parent company Reliance has a market value of around 180 billion dollars, which corresponds to a good six percent of India’s gross domestic product. Last year, the company made a good six billion dollars in net profit, which it was able to invest in Jio.
Average consumption? 12 GB per month
The perhaps decisive advantage, however, was another: Jio has no cell phone legacy. When all the other Indian telecommunications companies were still in the middle of expanding their comparatively slow 3G network in 2010, Ambani was already thinking one step further. He had towers built across the country for the much faster and everyday 4G network and catapulted India into the digital century. In 2016, only 17 percent of rural regions were connected to the Internet, and access was slow and expensive. Only five years later, half the country is online: India currently has almost 735 million Internet users, 97 percent of whom use a mobile high-speed network and an average of around 12 gigabytes of data volume per person per month consumed.
But the price war is taking its toll, Jio has comparatively low income despite its 411 million users. The mobile phone giant achieved sales of $ 3.1 billion in the last quarter of 2020. At Deutsche Telekom in the same period, with far fewer customers, it was 27.6 billion euros, which is the equivalent of more than 32 billion dollars.
Facebook, Google – everyone wants Jio
Nevertheless, the debt that Ambani took on for Jio disappeared in the past year. In the three months from April to July 2020, one after the other, Facebook, Google, Intel, Qualcomm, the Saudi Arabian state fund, the one from Abu Dhabi and a few other companies invested a total of almost $ 20 billion in Jio in order to get a piece of the pie.
A few days after Facebook invested six billion dollars for ten percent of Jio, Mark Zuckerberg announced that Indian WhatsApp users will soon be able to order groceries on the platform. Or you can order from Jio Mart right away. This is the in-house online shop, which has only been around for a few months and which is still in a test phase, but is already attracting new customers with discounts of up to 50 percent on groceries and smartphones. A well-known strategy that has brought Jio billions more from overseas investors.
Is Amazon also getting involved?
India’s richest man is pursuing the classic Silicon Valley plan: now that he has a huge platform, he can monetize his more than 400 million customers and build a digital platform empire around them. Under the umbrella of “Jio Platforms” there is already a Zoom clone with Jio Meet as well as an alternative to Spotify. Customers can watch movies on Jio Cinema, read messages on Jio News, and text friends on Jio Chat. There is also a payment service. In the end, a super app should be created for everything, as Thomas Rappold says. If you think of the Internet in India, you should have Jio in mind, only then Google, Facebook or WhatsApp.
The big challenge on the way there are the remaining one billion Indians who have been using an alternative to Jio so far. Ambani has to convince as many of them as possible of his service. And there are the 60 million small businesses that are practically on every street corner in India, but they are not yet connected to the internet and thus to online trading.
Mukesh Ambani wants to build the Indian version of Amazon, an “everything store” where customers can buy everything and chat with their friends and watch videos. So far, his plan is working. Amazon itself is considering investing $ 20 billion in the business.