Failed to Understand Reliance Jio $25 Bn Investment vs. Ignoring Acquisition of Incumbent with Market Cap of $ 12 Bn


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.

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Visionary Leader with 22 years of multi-functional experience - combine astute tactical, strategic, business, technology and industry skills in ICT domain at domestic and international level (Wired/Wireless/ networks /platforms/ connected device) .... More

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