5 More Years For Mukesh Ambani – What it Means for Jio

Mukesh Ambani’s decision to continue as the CMD of the company for another 5 years (with an annual salary of Rs 4.17 crore and Rs 59 lakh of perquisites and allowances), also means that high octane action in Indian telecom and digital lifestyle industry is far over, perhaps to the discomfort of rivals like Airtel, Vodafone and Idea (so on to be Idea-Vodafone).

Reliance Group is not just cash rich, but more than that Mukesh Ambani, who leads from the front is a man who strongly believes in innovation, disruption, and a mass market approach. His earlier stint when he launched Reliance Communications (later taken over by younger Anil Ambani in 2005 when they parted ways) was the first time when he shook the telecom industry with his technology and price offerings. And in the second stint when he perceived and launched Jio, he has once again disrupted the industry and is completely changing the rules of the game. The final beneficiary will be the consumer, but for Reliance group Jio could turn into a mint.

Ambani hopes that his consumer businesses—Reliance Jio Infocomm Ltd and Reliance Retail Ltd—will contribute on par with its energy and materials businesses over the next decade. Already Reliance’s consumer businesses has attained a threshold from which they will start contributing meaningfully to consolidated profits. From a mere 2% in FY17, Reliance Jio and Reliance Retail (which has a significant digital component) accounted for 13.1% of RIL’s consolidated segment Ebitda in FY18. Reliance Jio, that started in late 2016, turned profitable in the very first year of operations. Jio earned a net profit of ₹723 crore on a turnover of ₹23,714 crore in its first year of commercial operations. Reliance Jio had 186.6 million customers at the end of March 2018, and the lowest churn in the industry at 0.25% per month. Each Reliance Jio subscriber on an average consumes 9.7GB data, 716 minutes of voice calls, and 13.8 hours of video per month. Jio also recently announced enterprise solutions, FTTH, and IOT, with beta trials initiated in a few locations.

Reliance Retail has the distinction of operating the largest consumer electronics store chain in India through a network of over 5,700 Reliance Digital and Jio stores offering over 200 national and international brands offering a widest assortment of products spanning across audio & video products, digital cameras, gaming consoles & games, computers, laptops, tablets & peripherals, mobile and fixed line instruments as well as a wide range of accessories and new-age gadgets across all major product categories, besides consumer durables. It also has ResQ, the service arm which is a full-fledged service organisation and is India’s first multi-product, multi-brand and multi-location service network that provides solutions encompassing end-to-end product life cycle requirements for the entire range of digital products digital and consumer durables products and other value-added services. It has built the largest distribution reach for devices in India. Reliance Retail has developed a strong portfolio of products offered under its own label Reconnect. Reliance Retail offers a wide range of 4G LTE smartphones and 4K TVs under its own brand LYF. The LYF range of smartphones offers features like Voice over LTE (VoLTE), Voice over Wi-Fi (VoWi-FI), HD Voice and HD quality video calling. Jio Stores caters to the rapidly growing market for mobility and communication products offering a wide range of mobile phones, tablets and accessories. Within a short span of time Reliance Jio Stores has grown to become India’s largest retail chain with presence in over 3,700 cities.

Everybody, including Mukesh Ambani’s employees, partners, and rivals unanimously agree that Ambani not just perceived and conceptualized Jio because of his vision of a digital world and the opportunities it will throw up; but also that he has been a hands on man who has lead the company in terms of all the path breaking technology and business models. That he will be personally driving and monitoring almost every small and big technology and business decisions for another five years  is great news for Jio, but certainly not for its competitors in the market,who are already under severe pressure.

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