Reliance Industries is said to invest nearly $15 billion (approximately ₹1,06,260 crores) to create a digital services company. This step is being taken to cut debt at its telecom venture; also it might be potentially a way to make the entry of a strategic investor. Billionaire and owner Mukesh Ambani’s debt burden has skyrocketed remarkably since its telecoms unit Jio Infocomm entered India’s congested mobile market in late 2016. It was known for offering free voice calls and cut-price data to build a massive consumer base, until recently when TRAI forced them to charge their consumers.
Back in 2016, Jio Telecomm was introduced that made calls, data for free that forced rivals to merge, driving companies such as Reliance Communications, (controlled by Ambani’s younger brother) and Aircel out of business. This made the other telecoms opt for unlimited plans.
Reliance Industries will have the right to convert its ₹1.08 lakh crores ($15.26 billion) investment in the new digital company into equity, it said in a statement. iNThe new unit will invest the funds in Jio which will make the telecoms venture almost net debt-free by the end of March 2020. The new digital services company, which also includes Jio’s news, movie and music apps – will also acquire Reliance’s equity investment of ₹65,000 crores in Jio.
Reliance Chairman Mukesh Ambani said in the statement, “Given the reach and scale of our digital ecosystem, we have received strong interest from potential strategic partners. We will induct the right partners in our platform company, creating and unlocking meaningful value for RIL shareholders.”