Reliance AGM 2021: Ambani’s ‘2G-Mukt’ Goal To Power India’s Digital Economy 

by Tushar Gupta - Jun 25, 2021 06:00 AM
Reliance AGM 2021: Ambani’s ‘2G-Mukt’ Goal To Power India’s Digital Economy Mukesh Ambani at the 83 AGM of FICCI. (Pradeep Gaur/Mint via GettyImages) 
Snapshot
  • Reliance, with its new offerings including JioPhone and 5G services, will serve as another launchpad for strengthening India’s digital economy.

Addressing Reliance’s 44th Annual General Meeting (AGM), chairman Mukesh Ambani made several announcements, notably that of making India ‘2G-mukt’ and ‘5G-yukt’. Speaking about Reliance Jio’s partnership with Google, Ambani highlighted the progress with the company’s 5G ambitions.

Ambani announced that Jio and Google Cloud will be entering a 5G partnership where Jio will employ cloud technology from the Silicon Valley giant to power 5G solutions across India.

Already, Jio has been conducting 5G trials along with Bharti Airtel and Vodafone Idea and has achieved a speed of up to 1Gbps. While Ambani has pledged to be the first to launch 5G services in India, he also voiced his ambition about JioPhone spearheading ‘2G-mukt’ India drive.

Anticipated for long, the android smartphone will be launched in close collaboration with Google in early September, around Ganesh Chaturthi.

Touted as the most affordable smartphone across the world, there was no word on the costing. However, experts suggest that it will not be priced beyond Rs 5,000. The operating system for the smartphone will be an optimised version of Android and will host all the services offered under the Jio platform.

While Jio added close to 38 million subscribers to its network in 2020, the imminent challenge for the conglomerate was from the plateauing subscriber addition, given the stagnation in the 4G subscriber base and a competitive pushback from Bharti Airtel.

At 425 million subscribers, Jio’s marketplace for 5G is ready. However, the customer transition from 4G to 5G would be far more difficult relative to that from 2G/3G to 4G. From the telecom infrastructure to the pricing, the transition will have a lot of challenges.

Thus, the attempt to cater to over 300 million customers, still using 2G, is ideal. Given the biggest hindrance to customers still on 2G using feature phones, is the pricing of the smartphones, even the cheapest Androids. However, the launch of JioPhone with financing is expected to create a new market for Jio’s 4G services.

For Jio, the focus would be on average revenue per user by having them embrace 5G after 4G and increasing the growth rate for subscribers by pushing 2G users to embrace the new JioPhone, coming with a Jio 4G SIM card.

For Jio, the obvious goal would be to stretch its subscriber base to 600 million 4G and 5G subscribers in the next two years. This would align with their goals for JioMart and other services including Jio Cinema, Jio Music, Jio TV, Jio HealthHub, Jio News, Reliance Digital, Jio Engage, Jio Cloud and Jio Switch, and eventually, the super-app Jio is working.

For a number of users on 4G and 5G services, the Jio-Facebook super-app would be an enabler of digital services. The super-app built on the lines of China’s WeChat will have mini-apps where individuals and groups can use the digital interface and infrastructure to host their businesses, restricted by geography or services.

In lieu of a monetary arrangement, the owner of the digital service, even if it’s similar to one already being offered by Jio itself, could scale their entrepreneurial venture, similar to how Amazon is used by third-party sellers.

The mini-apps could include small and medium enterprises wanting to serve a small region as well. This would negate the need for their apps to be separately downloaded from Google or Apple’s app store.

If one is to estimate the potential of the super-app in the works, a reference to WeChat’s mini-apps or mini-programs as they are called in China can be helpful. By 2020, WeChat had more than 1.2 billion active users. However, the number of mini-apps on the app was more than 3.2 million by the beginning of 2020.

These mini-apps, built within the main app interface, attracted 491 million users on an average per month by June 2018. A year later, this number had swelled by 50 per cent to more than 746 million users.

The average time spent on these mini-apps per person per month also increased in the same period from 52 minutes to 64 minutes. For Jio, this growth on the app and for its mini-apps will come from users transiting from 2G to 4G.

For entrepreneurs, there would be an incentive to be on the app as well, furthering Jio’s monopoly, and adding to the challenges of Tata and Amazon, working on consolidating the e-retail space.

For Tata and Amazon, however, the idea of collaborating with Bharti Airtel or Vodafone Idea will not be unthinkable, given they all would be looking to challenge the hegemony of one company.

Interestingly, Airtel was looking to launch 4G smartphones in collaboration with Karbonn Mobiles in 2017. However, for now, the company has chosen to focus on innovative financing and bundling solutions with device manufacturers. Tata, in late 2020, committed an investment of around $1.5 billion for mobile phone and component manufacturing.

Can Tata, in the coming years, after a series of acquisitions, do a Nano on the smartphone industry? A similar question can be asked for Amazon too.

Therefore, the overall transition to 4G and 5G, powered by Reliance, will bring the much-needed boom to India’s Internet economy, starting from the gig economy.

For instance, Uber, in India alone, facilitated 14 million rides per week in 2019. Zomato, in 2019, was delivering more than 1.3 million orders from over 150,000 eateries each day. Swiggy, with 140,000 eateries on its platform, made 1.4 million deliveries each day last year. BigBasket, which makes more than 150,000 deliveries in 2019 per day, was recently acquired by the Tata Group.

Acquisition of BigBasket was an obvious step to venture into the retail space for Tata Group. Last year, during the lockdown, against Reliance JioMart’s 400,000, BigBasket was registering close to 300,000 orders per day. Amazon and Grofers had around 100,000 orders each per day.

However, the boom in the Internet economy will not be restricted to e-commerce and retail alone but will extend to other untapped sectors today. These include financial services, gaming, local transportation, entertainment, charities, health, media, legal services, education, office and administrative support, sales, utilities, and so on.

In India’s pursuit of being a $5 trillion economy by 2026, digital access to micro, small, and medium enterprises would be a game-changer.

In 2016, Reliance’s Jio, a telecommunication offering, changed the parameters of pricing and accessibility in India, boosting the consumer Internet economy. Today, Reliance, with its new offerings including JioPhone and 5G services, will serve as another launchpad for a boost to India’s digital economy.

Mukesh Ambani has further raised the stakes in the battle against Tata Group and Amazon.

Tushar is a senior-sub-editor at Swarajya. He tweets at @Tushar15_
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