Qualcomm is the latest company to invest Rs 730 crore in Reliance Industries for 0.15 per cent stake in its digital unit Jio Platforms.
“Qualcomm Ventures’ investment will translate into 0.15 per cent equity stake in Jio Platforms on a fully diluted basis,” the company said in a statement.
The partnership will help Jio Platforms to “roll out advanced 5G infrastructure and services for Indian customers,” Reliance said in a statement.
Qualcomm’s deal comes at a time when India is gearing to auction 5G airwaves to telecom service providers.
With this deal, Reliance has sold 25.24 per cent stake in Jio Platforms Ltd – the unit that houses India’s youngest but largest telecom firm Jio Infocomm and apps. In total, Jio has raised Rs 1,18,318.45 crore.
Qualcomm, which is the 12th marquee firm to have set sight on India’s hottest digital play in as many weeks, values Jio Platforms at Rs 4.91 lakh crore, the statement said.
Although Jio Platforms also comprises a wide range of services from music streaming to online retail and payments, the Jio Infocomm-the mobile carrier is company’s centrepiece. With this, the company 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.
Chairman and Managing Director of Reliance Industries, Mukesh Ambani has always pitched Jio Infocomm as a tech company instead of a traditional telco.
In June, Ambani announced that his company is now net debt free after it raised a record Rs 1.69 lakh crore from stake sales and rights issue in less than two months.
Proceeds from the stake sales in Jio Platforms along with the Rs 53,124 crore raised in a rights issue in June and from sale of a 49 per cent stake in its fuel retail network to BP last summer for Rs 7,000 crore, helped the company to become net debt-free.
“Today I am both delighted and humbled to announce that we have fulfilled our promise to the shareholders by making Reliance net debt-free much before our original schedule of 31st March 2021. Exceeding the expectations of our shareholders and all other stakeholders, again and yet again, is in the very DNA of Reliance. Therefore, on the proud occasion of becoming a net debt-free company…,” Ambani had said in June.
Speaking on the latest deal, Ambani said Qualcomm is the world’s leading wireless technology innovator and the driving force behind the development, launch and expansion of 5G.
“Qualcomm has been a valued partner for several years and we have a shared vision of connecting everything by building a robust and secure wireless and digital network and extending the benefits of digital connectivity to everyone in India,” he said.
“As a world leader in wireless technologies, Qualcomm offers deep technology know-how and insights that will help us deliver on our 5G vision and the digital transformation of India for both people and enterprises,” Ambani added.
Steve Mollenkopf, CEO of Qualcomm Incorporated, said, “With unmatched speeds and emerging use cases, 5G is expected to transform every industry in the coming years”.
“Jio Platforms has led the digital revolution in India through its extensive digital and technological capabilities. As an enabler and investor with a longstanding presence in India, we look forward to playing a role in Jio’s vision to further revolutionise India’s digital economy,” he said.
The transaction is subject to customary conditions precedent.
Morgan Stanley acted as financial advisor to Reliance Industries and AZB & Partners and Davis Polk & Wardwell acted as legal counsels. Trilegal acted as legal counsel for Qualcomm Ventures.
The Jio Platforms deal spree began on April 22 when social networking giant Facebook agreed to acquire 9.99 per cent for Rs 43,573.62 crore.
Since then, six US private equity firms invested in Jio: Silver Lake Partners bought 2.08 per cent for Rs 10,202.55 crore, Vista Equity Partners paid Rs 11,367 crore for a 2.32 per cent stake, General Atlantic acquired a 1.34 per cent stake for Rs 6,598.38 crore, KKR paid Rs 11,367 crore for a 2.32 per cent stake, TPG bought a 0.93 per cent stake for Rs 4,546.80 crore and L Catterton picked up 0.39 per cent for Rs 1,894.50 crore.
Earlier this month, the investment arm of computer chip giant Intel Corp picked up 0.39 per cent stake for Rs 1,894.50 crore.
Jio Platforms has also received funds from the Middle East which started with Mubadala Investment Co which picked up a 1.85 per cent stake for Rs 9,093.60 crore and was followed by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, as well as the Abu Dhabi Investment Authority buying 2.32 per cent and 1.16 per cent stake for Rs 11,367 crore and Rs 5,683.50 crore, respectively.
Qualcomm’s investment values Jio at Rs 4.91 lakh crore – the same amount as the previous several deals and a 12.5 per cent premium to the first investment by Facebook.