For the fifth straight year, Reliance Industries Ltd (RIL) has used its annual general meeting (AGM) as a platform to announce strategic initiatives. It all started with the launch of Reliance Jio’s 4G services in 2016, followed by the launch of JioPhone in 2017, JioGigaFiber in 2018 and the plan to become a net debt-free company last year.

In the 2020 AGM, the big announcement pertains to the strategic partnership with Google, with the intent to build an Android-based smartphone operating system. The idea is to target the price-sensitive 350 million odd feature phone users with a new JioPhone.

Graphic: Paras Jain/Mint

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Graphic: Paras Jain/Mint

Before Google, chip-maker Qualcomm invested in Jio Platforms Ltd through an investment arm. It almost looks all the pieces of the puzzle for building a new customised phone are in place. Needless to say, the more technology partners Jio has, the more difficult things get for its competitors.

But good partnerships are no guarantee of success. As they say, the proof of the pudding is in its eating. The end-product and its pricing will be key in determining the company’s success in weaning away feature phone users from Bharti Airtel Ltd’s and Vodafone Idea Ltd’s networks.

Note, the first JioPhone was announced amid much anticipation in the 2017 AGM. The number of feature phone users then stood at around 500 million, and the company had said its target was to migrate the majority of the users to JioPhone. A year after its launch, JioPhone users amounted to only 25 million, and the last available number suggests the subscriber base of the 4G feature phone stands at around 100 million. “Feature phone users are not only price-sensitive, but also tend to use handsets for a far longer duration, and churn rates tend to be low in this segment,” said an analyst at a domestic brokerage.

Progress has been far slower for the JioGigaFiber product announced in the 2018 AGM. While it had initially set a target of 50 million subscribers, analysts said at last count there were only around 1 million. “Last-mile connectivity challenges were hugely underestimated by the company,” says the analyst mentioned above.

Of course, the flagship Jio product has grown by leaps and bounds, and the rush of financial and strategic partners suggests there is further room for upside. In the past three months, RIL has raised over $20 billion selling about a 33% stake in Jio Platforms. “If PE firms were only buying Jio for its telco operations, they have overpaid by about 25%. The premium is for the optionality from Jio’s super-app ambitions,” said an analyst familiar with the thinking of a PE firm which invested in Jio Platforms. Of course, Jio still needs to demonstrate how its super-app ambitions can be monetized.

While investors await this, RIL raised hopes of another form of monetization – a stake sale in Reliance Retail Ltd, where its new commerce venture is housed. For a market driven by hope, RIL’s AGM had an ample dose.

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