THE WORLD’S BILLIONAIRES
MUKESH AMBANI combined worth was a staggering $85 billion. Mukesh was the fifth-richest person in the world, with a fortune of $43 billion. Anil was a close No. 6 with $42 billion; his biggest asset was a 65% stake in the telecom company, then worth $20 billion. The financial crisis, coupled with bad blood, took its toll. It was soon evident that the rapprochement between the brothers was only on paper. When Anil sought to merge his telecom firm with South Africa’s MTN in 2008, Mukesh intentionally stalled the deal, citing the family settlement that gave him the right of first refusal on any stake sale in the telecom unit. In 2009, shares of Anil’s companies plunged, wiping away nearly $32 billion of his wealth. A year later, after a legal skirmish, the brothers terminated their noncompete agreement. Suddenly the path was clear for Mukesh to get back into telecom. MUKESH STARTED SMALL–and
Completing the humiliation, Mukesh bought the remains of his brother’s debt-strapped telecom business for $3 billion..
stealthily–by acquiring a little company in 2010 that had a license to provide only broadband internet. But Ambani knew “voice” was really just another type of data and that the rules would eventually have to change. When they did, in 2013, Mukesh was ready. He started building at a feverish pace, tapping into Reliance’s construction, regulatory and execution expertise to quickly create a countrywide network that, by end of this year, will number 260,000 towers (some leased) and 186,000 miles of optical fiber. He worked with electronics giants Qualcomm and Spreadtrum to design low-cost 4G handsets, a major leap forward in what was then largely a 2G market, selling them for a refundable security deposit of $22. In all Reliance has spent $33 billion on the project to date, funding it with a mix of debt ($7 billion), equity ($17 billion), plus deferred payments and supplier credits ($9 billion). Jio was impossibly cheap and impossibly fast and, perhaps most impressive given India’s size, nearly ubiquitous, available in 95% of the country. The incumbent players struggled merely to stay in business. Telenor and the Tata Group both sold their wireless operations to telecom tycoon Sunil Mittal’s Bharti Airtel, a joint venture with Singapore’s Singtel. Onetime rivals Vodafone India and Idea Cellular, owned by billionaire Kumar Birla, agreed to merge to better withstand the onslaught. And Mukesh, completing the humiliation of his younger brother, bought the remains of Anil’s debt-strapped telecom business for an estimated $3
38 FORBES MIDDLE EAST APRIL 2018
billion-plus. It had once been worth $43 billion. “It was purely a business decision,” Mukesh says. “It works for us, and we’ll make the most of it.” Thanks to Jio, India’s annual mobile data traffic has jumped to 28 billion gigabytes from just over one billion a year ago. In mobile data consumption, India now ranks above China and the U.S. Jio alone carries more mobile data traffic than Sprint, Verizon and AT&T combined. Ambani has grand visions for how all that information can transform his country and lift it out of poverty. He cites the example of Indian agriculture, which is plagued by poor productivity and low quality. “I see all such inefficiencies as opportunities,” Ambani says. Jio has developed a platform for India’s 120 million farmers, most of whom have small landholdings, that offers technical information on sowing and harvesting in addition to real-time market prices and access to top agricultural experts. Ambani also sees Jio playing a role in transforming Indian education. Within a year, he hopes, Jio will have connected 35 million students attending India’s colleges. At the same time, he wants Jio to reach the remotest corners of the country, right down to the smallest villages. Of course, this will all remain a pipe dream if Jio doesn’t find a way to make money. Thanks to some aggressive accounting, the company managed to squeeze out a small profit ($78 million on revenues of $1.1 billion) in the final quarter of 2017. But Jio’s core strength–that it’s cheap–works against it financially. To succeed, Jio needs to sign up many more subscribers and then upsell them into consuming lots of data through apps like Jio Cinema (6,000 movies) and Jio Music (16 million songs). Once they are hooked, Jio will have to raise data prices without losing too many customers. Its current rates aren’t sustainable. Ambani seems unfazed by the economics and willing to invest for the long haul. He is grooming his three children to take over the business and is increasingly comfortable with a view of Reliance from 39,000 feet. “These days I’m in the mind-set of being nose in, fingers out,” he says, meaning keeping his nose in the boardroom and his hands out of operations. A Jio IPO is on the horizon, but for now he’s basking in the glow of having provided millions of ordinary Indians with access to high-speed Internet and all its attendant opportunities. “This is a race,” he says, “that India is running with the rest of the world.”