RIL AGM takeaways: Make-in India 5G, Google deal, JioMart push, demerger & more

NEW DELHI: From 5G offerings to striking a strategic deal with Google and from announcing a push to online retail business JioMart to announcing a slew of measures for get the oil & gas business to a higher growth path, Chairman Mukesh Ambani talked of big plans for all the three business verticals (telecom, retail and oil & gas) at Reliance Industries' (RIL) 43rd annual general meeting (AGM) on Wednesday.

Here are the takeaways from the sixth richest person's address to shareholders on Wednesday:

Make-in-India 5G solutions
Data is wealth and Indian wealth must remain in India, Ambani said while addressing the 42nd AGM at Reliance Industries last year on August 12, 2019. On Wednesday, his company went a step ahead. Ambani said his company has indigenously developed 5G solutions and is expecting to roll it out sometime in 2021. "Jio has designed and developed a complete 5G solution from scratch. It will be ready for trials as soon as 5G spectrum is available, and can be ready for field deployment next year," Ambani said.

Rs 33,737 crore Google deal
Confirming recent rumours, Ambani said search engine giant Google will invest Rs 33,737 crore in Jio Platforms for a 7.73 per cent stake. This investment by Google values Jio Platforms at an equity value of Rs 4.36 lakh crore, 11.20 per cent lower than the Rs 4.91 lakh crore valuation at which Qualcomm Ventures bought a smaller stake in the telecom business just two days ago.

This was even lower than the enterprise value of Rs 4.62 lakh crore that Facebook's recent 9.99 per cent stake buy (Rs 43,574 crore) had assigned to Jio Platforms. Ambani insisted he was now only looking at strategic investors.

Hands on 4G, 5G handsets
With Google as partner, Ambani said RIL was looking to design an entry-level 4G or even a 5G smartphone at a price that could be a fraction of current cost. The recent deal with US chipmaker Qualcomm, thus, looks strategic.

The move may set to hit China's Huawei's 5G plans in India amid the already heightened India-China tensions. "Google and Jio are partnering to build a value-engineered Android-based smartphone operating system," Ambani said. Reliance Jio launched a feature phone called JioPhone in 2017 and has sold 100 million Jio Phones so far. These phones account for 20 per cent of feature phones now being used in India.

JioMart, retail biz update
Ambani said his company has successfully piloted the JioMart grocery model with kirana partners. The beta version of JioMart grocery platform, he said, is being piloted in 200 cities. "Daily orders have crossed 2.5 lakh, and the number is growing each day," Ambani said. He said more than two-thirds of Reliance Retails' nearly 12,000 stores are operated in Tier II, III and IV towns. "It sources over 80 per cent of fruits and vegetable directly from farmers," he said. Ambani said JioMart and Facebook-owned WhatsApp will work together to create more growth opportunities for kirana stores in India.

Overall, he said the company's retail business will induct global partners and investors in Reliance Retail in the next few quarters.

O2C biz listing, Aramco deal on back burner
Ambani said RIL will be spinning off the oil-to-chemical (O2C) business into a separate subsidiary "to facilitate multiple partnership opportunities." He expects to complete the process by early 2021. Ambani said his company's planned $15 billion stake sale in oil-to-chemical business to Saudi Aramco has not progressed as per original timelines due to Covid-19.

Ambani had in August last year (at 42nd AGM) announced talks for sale of 20 per cent stake in the O2C business, which comprised the twin oil refineries at Jamnagar in Gujarat and petrochemical assets. "The deal with Saudi Aramco hasn't progressed as per the original timeline due to unforeseen situations in the energy market and Covid-19 situation," he said. He did not say anything on a new timeline to complete the deal, but insisted that the two companies are committed to a long-term partnership.