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> Within a span of four years, Reliance pumped in over $33 billion from its other businesses to expand Jio’s market. > Jio was able to achieve these cheap rate

> Within a span of four years, Reliance pumped in over $33 billion from its other businesses to expand Jio’s market. > Jio was able to achieve these cheap rates by acquiring the only firm that won a pan-India 4G license, leveraging the superiority and cost-efficiency of 4G compared to older cellular standards, and because of the unparalleled size and resources of its parent company. [emphasis mine] > A sizable portion of the investments will go toward paying off the existing debts accumulated by Reliance to fund this extravagant project and its other businesses, Reading between the lines in this article, it sounds like Reliance is simply buying market share by running Jio at a big loss, and temporarily making up the difference with huge investment rounds. I feel like we've seen this show a lot lately and it doesn't always work out.

9nGQluzmnq3M 6y ago
That was Jio's strategy in the early days, but they're already quite profitable (~US$500MM in Q2) and trending upwards. https://www.business-standard.com/article/companies/reliance-jio-pre-tax-profit-zooms-147-in-june-quarter-revenue-up-33-7-120073100040_1.html https://www.business-standard.com/article/companies/reliance...
ramshanker 6y ago
>>> by acquiring the only firm that won a pan-India 4G license. IIRC, that farm was simply a proxy with some back channel deals. Parent Company didn’t want their names in auction, that would have made the auction much more expensive. So they acquired the spectrum trough a front-face farm and later acquired it.
- rudiv 6y ago
  AFAIK the original purchase was much cheaper because the spectrum was assigned for IPTV, not telephony. The government later 'regularized' it, that being a euphemism for being bribed enough to change the allowed use of the spectrum.
  - aravindet 6y ago
    Correct, here is a well researched article from 2016. https://thewire.in/tech/the-immaculate-conception-of-reliance-jio https://thewire.in/tech/the-immaculate-conception-of-relianc...
nocoder 6y ago
You are right in your analysis. Jio is using a different accounting approach to show that they are profitable. One - Their depreciation model is non-standard vs. what is used by other telecom companies & Two - They are booking the sales of subsidized devices under their retail subsidy - Reliance retail. If there is someone who understand this better, I would like to get more insight. https://economictimes.indiatimes.com/industry/telecom/telecom-news/new-account-method-helps-jio-stay-profitable-despite-arpu-fall/articleshow/70323759.cms?from=mdr https://economictimes.indiatimes.com/industry/telecom/teleco...
- chvid 6y ago
  So it is fraud?! Pretending you have a profitable business by hiding spiraling debt and other cost in a separate entity.
  - quantummkv 6y ago
    No. Jio (and Reliance) have actual paying users who are given genuine services that generate actual genuine revenue. And I doubt that the debt is going to spiral anywhere. Most of that debt was a one time deal to create a nationwide greenfield network.
kumarvvr 6y ago
Isn't that what every early stage SV company does? Spend investor money to acquire and engage audience?
- vijaybritto 6y ago
  Yes and 99% of them go bankrupt when unable to return profits
  - puranjay 6y ago
    Except Jio's parent company is an extremely profitable entity in a sector with certain demand and deep rooted relationships with the government
    - vijaybritto 6y ago
      Yes Cronyism will help them for sure. Lets see
paulftw 6y ago
Yes, but don't forget that "Ambani family have close ties to the ruling government" and also Jio is "the only firm that won a pan-India 4G license, leveraging the superiority and cost-efficiency of 4G". I'm super curious what technical reasons mandate that there can be only one 4G license in a country with 1.4 billion people. And how that affects competition in a country that has Corruption Perception Index equal to that of Morocco, Ghana, China or Benin. edit: formatting
- mesaframe 6y ago
  > Ambani family have close ties to the ruling government" Source?
  - anupamchugh 6y ago
    Source: https://in.reuters.com/article/india-election-ambani/indias-richest-man-mukesh-ambani-backs-candidate-from-congress-party-idINKCN1RU1MY https://in.reuters.com/article/india-election-ambani/indias-...
    - mesaframe 6y ago
      It totally contradicts the original comment.
- harsh3195 6y ago
  There are multiple 4G licenses in India. Jio just has a majority in market share.
- quantummkv 6y ago
  You seem to be insinuating that Jio is the only telecom that was given special all-India spectrum. And that is false. All the spectrum was offloaded in public auctions were everyone participated and bought spectrum. Jio is not the only telecom in India with 4g spectrum or services. I personally use Airtel, and I get 4g everywhere I go without issues. >I'm super curious what technical reasons mandate that there can be only one 4G license in a country with 1.4 billion people. The confusion you have seems to stem from the fact that Jio advertises itself as India's only full 4g network. What that means is that the greenfield network build by Jio only uses and supports 4g networks and not the older 2g and 3g networks. So in other words, the Jio network is 4g exclusive for it's customers. The older telecom are older and still operate old 2g and 3g networks so they cannot market themselves that way
raxxorrax 6y ago
Seems it works for them just fine. Amazon had a similar strategies while being a lot smaller at the time. You need multiple revenue streams to really push for market dominance.

9nGQluzmnq3M 6y ago

That was Jio's strategy in the early days, but they're already quite profitable (~US$500MM in Q2) and trending upwards. https://www.business-standard.com/article/companies/reliance-jio-pre-tax-profit-zooms-147-in-june-quarter-revenue-up-33-7-120073100040_1.html https://www.business-standard.com/article/companies/reliance...

ramshanker 6y ago

>>> by acquiring the only firm that won a pan-India 4G license. IIRC, that farm was simply a proxy with some back channel deals. Parent Company didn’t want their names in auction, that would have made the auction much more expensive. So they acquired the spectrum trough a front-face farm and later acquired it.

rudiv 6y ago
AFAIK the original purchase was much cheaper because the spectrum was assigned for IPTV, not telephony. The government later 'regularized' it, that being a euphemism for being bribed enough to change the allowed use of the spectrum.
- aravindet 6y ago
  Correct, here is a well researched article from 2016. https://thewire.in/tech/the-immaculate-conception-of-reliance-jio https://thewire.in/tech/the-immaculate-conception-of-relianc...

nocoder 6y ago

You are right in your analysis. Jio is using a different accounting approach to show that they are profitable. One - Their depreciation model is non-standard vs. what is used by other telecom companies & Two - They are booking the sales of subsidized devices under their retail subsidy - Reliance retail. If there is someone who understand this better, I would like to get more insight. https://economictimes.indiatimes.com/industry/telecom/telecom-news/new-account-method-helps-jio-stay-profitable-despite-arpu-fall/articleshow/70323759.cms?from=mdr https://economictimes.indiatimes.com/industry/telecom/teleco...

chvid 6y ago
So it is fraud?! Pretending you have a profitable business by hiding spiraling debt and other cost in a separate entity.
- quantummkv 6y ago
  No. Jio (and Reliance) have actual paying users who are given genuine services that generate actual genuine revenue. And I doubt that the debt is going to spiral anywhere. Most of that debt was a one time deal to create a nationwide greenfield network.

kumarvvr 6y ago

Isn't that what every early stage SV company does? Spend investor money to acquire and engage audience?

vijaybritto 6y ago
Yes and 99% of them go bankrupt when unable to return profits
- puranjay 6y ago
  Except Jio's parent company is an extremely profitable entity in a sector with certain demand and deep rooted relationships with the government
  - vijaybritto 6y ago
    Yes Cronyism will help them for sure. Lets see

paulftw 6y ago

Yes, but don't forget that "Ambani family have close ties to the ruling government" and also Jio is "the only firm that won a pan-India 4G license, leveraging the superiority and cost-efficiency of 4G". I'm super curious what technical reasons mandate that there can be only one 4G license in a country with 1.4 billion people. And how that affects competition in a country that has Corruption Perception Index equal to that of Morocco, Ghana, China or Benin. edit: formatting

mesaframe 6y ago
> Ambani family have close ties to the ruling government" Source?
- anupamchugh 6y ago
  Source: https://in.reuters.com/article/india-election-ambani/indias-richest-man-mukesh-ambani-backs-candidate-from-congress-party-idINKCN1RU1MY https://in.reuters.com/article/india-election-ambani/indias-...
  - mesaframe 6y ago
    It totally contradicts the original comment.
harsh3195 6y ago
There are multiple 4G licenses in India. Jio just has a majority in market share.
quantummkv 6y ago
You seem to be insinuating that Jio is the only telecom that was given special all-India spectrum. And that is false. All the spectrum was offloaded in public auctions were everyone participated and bought spectrum. Jio is not the only telecom in India with 4g spectrum or services. I personally use Airtel, and I get 4g everywhere I go without issues. >I'm super curious what technical reasons mandate that there can be only one 4G license in a country with 1.4 billion people. The confusion you have seems to stem from the fact that Jio advertises itself as India's only full 4g network. What that means is that the greenfield network build by Jio only uses and supports 4g networks and not the older 2g and 3g networks. So in other words, the Jio network is 4g exclusive for it's customers. The older telecom are older and still operate old 2g and 3g networks so they cannot market themselves that way

raxxorrax 6y ago

Seems it works for them just fine. Amazon had a similar strategies while being a lot smaller at the time. You need multiple revenue streams to really push for market dominance.