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Google picks up 7.7% stake in Reliance for Rs 33,737cr

Last updated on: July 15, 2020 23:50 IST

With this deal, Reliance has sold 32.84 per cent stake in Jio Platforms Ltd - the unit that houses India's youngest but largest telecom firm Jio Infocomm and apps, to 13 marquee firms for a total of Rs 1,52,055.45 crore.

Google has agreed to invest Rs 33,737 crore for a 7.7 per cent stake in Reliance Industries' technology venture and to cooperate on technology initiatives, including development of affordable smartphones, billionaire Mukesh Ambani said on Wednesday.

Addressing RIL's first-ever online annual general meeting, which had an unprecedented 3.2 lakh shareholders attending from 550 cities in 48 countries through the newly-minted JioMeet platform, he said Reliance Jio has developed an indigenous 5G solution which can be exported globally.


Also, the group's petrochemical and retail business has received strong interest from financial and strategic investors on lines of the massive Rs 1.52 lakh crore that the technology venture Jio Platforms amassed in less than three months from the likes of Facebook and Google.

The only disappointment for investors was on the company's talks for a sale of a 20 per cent stake in oil-to-chemical (O2C) business to Saudi Aramco for an asking of USD 15 billion, with Ambani saying talks have "not progressed as per the original timeline".

He, however, hastened to add that the company has raised enough money from stake sale in Jio Platforms and fuel retailing business as well as a rights issue to achieve the net-debt free target nine months ahead of schedule.

Achieving net-debt free status was one of the objectives behind Asia's richest man announcing stake sale talks on O2C business to Aramco in the company's last annual general meeting in August 2019.

On Wednesday, he neither said if the talks with Aramco were on track nor did he give a new deadline.

All he said was that RIL, operator of the world's largest refining complex, will replace transportation auto fuels with clean electricity and hydrogen as it set a target to become net carbon-zero by 2035.

"We are delighted to welcome Google as a strategic investor in Jio Platforms.

“We have signed a binding partnership and an investment agreement under which Google will invest Rs 33,737 crores for a 7.7 per cent stake in Jio Platforms," Ambani, 63, said.

California-based Alphabet Inc joins Facebook Inc, which opened the investment cycle in Jio Platforms by picking 9.99 per cent stake for Rs 43,573.62 crore, as well as chipmaker Intel Corp and Qualcomm Inc.

With Google coming on board, Reliance has completed its target of capital raising for Jio Platforms, he said.

With this deal, Reliance has sold 32.84 per cent stake in Jio Platforms Ltd - the unit that houses India's youngest but largest telecom firm Jio Infocomm and apps, to 13 marquee firms for a total of Rs 1,52,055.45 crore.

Proceeds from the stake sales in Jio Platforms, along with the Rs 53,124 crore raised in a rights issue in June and sale of a 49 per cent stake in its fuel retail network to BP last summer for Rs 7,629 crore will help the company become net debt-free, Ambani said.

The cumulative fund raising by Reliance in less than three months is now Rs 212,809 crore as compared to net debt of Rs 161,035 crore as on March 31, 2020.

Ambani, who has catapulted his way to become the sixth richest man in the world with $72.4 billion, surpassing Tesla's Elon Musk and Alphabet co-founders Sergey Brin and Larry Page, said his group can "design entry-level 4G or even 5G smartphone for a fraction of its current cost".

"Google and Jio are partnering to build an Android-based smartphone operating system," he said.

"Through this partnership, we are confident that we can accelerate the national mission of putting a smart device in the hands of every Indian."

As many as 350 million Indians still use a 2G feature phone.

"Our mission with Android has always been to bring the power of computing to everyone, and we've been humbled by the way Indians have embraced Android over recent years," said Google chief executive Sundar Pichai.

"The time is right to increase our commitment to India significantly, in collaboration with local companies, and partnership with Jio is the first step."

Google and Jio are partnering to build an Operating System that could power affordable 4G/5G smartphone.

Also, JioMart, online shopping portal, and WhatsApp will be working closely to enable customers seamlessly transact with mom-and-pop stores.

He also announced broadband for enterprises and small businesses and Narrowband Internet-of-Things (NBIoT).

Jio Platforms - which is also amassing a wide range of services from music streaming to online retail and payments - is expected to use its 388 million mobile phone subscribers as the cornerstone of an e-commerce and digital services business to rival Amazon and Walmart's Flipkart.

Jio, which is at the centre of Ambani's ambition to create a homegrown technology behemoth akin to China's Alibaba, has become Reliance's growth engine, combining with the company's fast-growing retail arm to help in offsetting the decline in oil and petrochemicals.

The oil-telecom-to-retail conglomerate also announced acceleration in the rollout of JioMart - its ecommerce venture.

"We have received strong interest from strategic and financial investors in Reliance Retail. We will induct global partners and investors in Reliance Retail in the next few quarters," he said.

Also, Reliance has been "approached by global companies for strategic partnerships in its petrochemical business, including in utilising feedstocks," Ambani said.

Photograph: ANI Photo

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