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For Reliance, Data Is The New Oil, Says Mukesh Ambani About Jio

Mukesh Ambani has bet at least $20 billion on building, from scratch, a national digital empire stretching from phones and hardware to home entertainment and custom-made apps.
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Mukesh Ambani announced that Jio will not charge customers for voice calls within India
Mukesh Ambani announced that Jio will not charge customers for voice calls within India

Highlights

  1. Reliance has bet at least $20 billion on building a digital empire
  2. Mr Ambani said Jio will not charge customers for voice call within India
  3. Jio may not contribute significantly to Reliance profits anytime soon
Mukesh Ambani has bet at least $20 billion on building, from scratch, a national digital empire stretching from phones and hardware to home entertainment and custom-made apps.

The 59-year-old is India's richest man, and his Reliance Industries oil & gas group is the country's most profitable.

The ambitious Jio project could make Reliance the most comprehensive provider of telecom and internet services across India.

"For Reliance... data is the new oil, and intelligent data is the new petrol," Mr Ambani said in March to news agency Reuters, explaining his drive to move closer to India's consumers.

Till today, Reliance had said little publicly about Jio. All that changed with Mr Ambani announcing that it will not charge its customers for calls, not even for long-distance ones within India. Data will be priced at Rs 50 per gigabyte - 20 per cent of what Indians have been paying thus far.

Jio is unlikely to contribute significantly to Reliance profits anytime soon, but is hugely significant for its future.

According to filings at the Commerce Ministry, Reliance has spent over Rs 29,000 crore on Jio and is expected to invest more - all adding up to more than what it has been spending on its core refining and petrochemicals business.

Reliance says its oil business is pumping out cash, and any investment in Jio has to be ambitious.

In 2010, Reliance Industries bought Infotel Broadband - on the day Infotel won nationwide spectrum - and decided it needed to offer more than a high-speed 4G network service. Instead, it would pitch an all-internet service, where even voice calls would be carried as data, cheaply, beating its rivals Airtel, Vodafone and Idea on quality and speed, according to Jio officials.

Naveen Kulkarni, co-head of research at Phillip Capital, said the Jio technology was "very efficient from a cost point of view," but needs India's smartphone ecosystem to evolve, making it unlikely Reliance will make money from Jio for at least five years.

At Jio's biggest campus, a sprawling cluster of glass buildings, manicured lawns and giant Jio logos outside Mumbai, the scale of Mr Ambani's vision is evident. The campus has 15,000 employees working for Jio alone, plus hundreds of consultants and service providers working alongside the group. There are large guest houses and hotels.

One company insider said the Jio logo is actually a mirror image of the word 'oil,' reflecting in a way Reliance's journey from oil drilling to data mining.

 

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