Reliance Jio is at the verge of
launching India's biggest Startup service and it took them six years to lay
down the network from scratch. It's really nice to see that some of the Indian
Industrialists believe in Indian consumer and are willing to invest fortune to
offer low priced service to make the service affordable.
It's also truly admirable aspect
that Reliance Jio kept on investing relentlessly without even thinking that they are risking their investment
as many complex technical and business related issues were arising on daily
basis.
At the same time, I am just
trying to understand that why Reliance Group decided to wait for six years ,
investment of more than $25 Bn, Shattering their balance sheet from Net Cash
positive company to debt laden company. Idea Cellular is one of the most dynamic
companies and was in the process of rebuilding the brand coupled with great
growth potential. With Reliance Cash generation as well as credit creating
capabilities, Idea Cellular was most suitable target for them at that point of
time. I am considering today's valuation including debt on their balance sheet
and that is just half of what Reliance Jio invested in brand new network which
is not even tested with multimillion concurrent users.
In current scenario, Reliance Jio
will take another 15 years to recover their cost and incurred interest provided
they capture number 1 position and by that time renewal period of spectrum will
come whereas in second scenario if Reliance would have gone for Idea Cellular
acquisition, by now Reliance could have changed the whole dynamics of Indian
Telecom sector.
I failed to understand so thought
of sharing with reader and if someone can give their point of view then it
would be great.
