So the early reports are out. Reliance Chairman Mukesh Ambani claims that the Jio platform added seven new subscribers every second since its launch last year. It seems Reliance Jio has a subscriber base of about 100 million; the fastest from zero to 100 million for any company in the world. The company has also announced that its free data offers will end in March and that it will start charging subscribers beginning April 1. But the packages that Jio will offer after April 1 will be so competitive that a bloodbath in the Indian telecom market will continue till 2018. The Jio onslaught has been so ferocious that Vodafone and Idea seem to be in serious talks to merge their operations. There are also reports of a combine between Tata, Reliance Infocom (run by Anil Ambani), Aircel Maxis and MTS.
But this piece is not about telecom wars in India about which enough has already been written. It is about the audacious strategy of Mukesh Ambani to create a bewildering behemoth in the form of Reliance Industries. Reliance effectively started under the late Dhirubhai Ambani as a textile company that became an oil, gas and petrochemical giant by the time Dhirubhai passed away in 2002. In 2007, Mukesh Ambani announced to the world that Reliance plans to invest Rs 25,000 crore to make Reliance Retail the largest retail company in the country. Ten years down the road in 2017, he wants Reliance Jio to become the largest telecom company in the country.
Nothing like this has been attempted or successfully executed before; anywhere in the world. Take America, the torch bearer of capitalism. There is a company called Exxon Mobil which is the largest oil company in United States. There is Walmart which is the largest retail company out there; as also in the world. And then there is Verizon, the largest telecom player in America. What Mukesh is attempting is to create a Reliance which will combine the Indian avatars of Verizon, Walmart and Exxon Mobil. Nowhere in the world has one see a single company or business group three completely different sectors like a colossus. Of course, individual verticals and sectors have seen waves of consolidation where mergers and acquisitions have created giants. But can you imagine the Walton family of Walmart trying to take over Exxon Mobil? Or Exxon Mobil trying to take over Verizon?
It seems Mukesh wants to achieve the seemingly impossible. In 2007, there were reports that Reliance Retail had set a target revenue of Rs one lakh crore in ten years by 2017. The actual revenue in 2016-16 was more than Rs 20,000 crore. That looks way below the original target of Rs one lakh crore. Nevertheless, Reliance Retail is undoubtedly the largest retail chain company in India, far outstripping the pioneer Big Bazaar. Now it seems Mukesh wants a repeat with Jio in telecom. How does Mukesh manage this? One reason is cash. Reliance Industries Ltd sits on a cash reserve in excess of Rs 1,50,000 crore. When you have that kind of money, you can indulge in seemingly impossible to win bets. The second is the Reliance culture nurtured since the days of Dhirubhai of think out of the box and think big.
There is a third reason too. No other company has "managed the ecosystem" as successfully as Reliance. And yet, doubts will persist. Oil, retail and telecom are completely different businesses that need different strategies and skill sets. Will a family owned and controlled entity be able to hire and nurture professional leaders who can separately manage the verticals? As of today, Mukesh might be on his way to achieve the impossible. But can he sustain this?
