(Bloomberg Opinion) -- Mukesh Ambani is ready with his triple play of carriage, content and commerce.
The richest Indian has already signed up 215 million customers in 22 months for his 4Gย mobile network. By upending the telecom industry's profitability with free voice calls and cheap data, he'sย forced many of his smaller rivals, including his younger brother Anil Ambani, into backing off. That putsย another 80 million or so subscribersย up for grabs.
But it's Ambani'sย entry intoย fiber-opticย broadband, announced at flagship Reliance Industries Ltd.'sย annual shareholder meeting on Thursday, that will complete hisย carriage plans. Anticipating a ruthless assaultย by JioGigaFiber, investors dumped competitorsย includingย Hathway Cable & Datacom Ltd., Siti Networks Ltd.,โโโโโโ Den Networks Ltd. and Sun TV Network Ltd.
Stock inย Reliance alsoย weakened asย shareholders tried to assess the investment needed to back Ambani'sย ambition.
At less than $2 a month average revenue per user, even a country of 1.3 billion people can only generate about $28 billion in revenue. As Fitch Ratings Ltd.'sย Nitin Soniย points out, at 30 percent operating margins, that translates into a meagerย $8 billion in Ebitda. Even withย Jio doubling its revenue market share from 20 percent to 40 percent, its take of Ebitda would be $3 billion on an investment of $36 billion. Something else has to click.
That something elseย will be content and commerce.
Ambani is already managing to feed video-hungry Indians 3.4 billion hours of content every month, and โย taking a leaf from the playbook of China's Tencentย Holdings Ltd. โ talking of interactive gaming. If he can own, say, 5 percent of the content on his carriage, that'sย an additional path to profit for Jio, which will probably look toย IPOย sooner rather than later.
Content, however, will only be the second arrow in Ambani's quiver.
Amazon.com Inc.ย and Walmart Inc. (which recently bought a majority stake in online marketplace Flipkartย Online Services Pvt)โโโย had better watch out for Reliance's biggest bet: commerce.
On Thursday, Ambaniย announced a plan to hook upย small retailers with a Jio-based technology platform that would in turn link toย the supply chain of his existing bricks-and-mortar Reliance Retail stores.
It's unclear if households in the 1,100 cities where Jio wants toย take its fiber network willย interrupt watching a Bollywood movie on their Jio TV to order groceries from their local storeย using voice commands... in Indian languages.
But Ambaniย won't meekly surrender India to Alexa. The oil refining and petrochemicalsย czar may be a late entrant into the consumer game, but now thatย he's there, he'llย go for theย full triple play.
To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net
ยฉ2018 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories โ On NDTV Profit.
