In its run-up to capture the substantial chunk of the telecom industry revenue in India, Reliance Jio and Reliance Industries Limited (RIL), its parent company has created seven subsidiaries to manage its telecom and content business, informed a highly placed Jio official. The Mukesh Ambani led telco recently made investments in Hathway and Den Networks, buying a significant stake in the two companies to solve its problem of last mile connectivity. As per the official who requested anonymity, the seven subsidiaries which Reliance Industries Limited (RIL) formed include Jio Content Distribution Holdings, Jio Internet Distribution Holdings, Jio Television Distribution Holdings, Jio Cable and Broadband Holdings, Jio Futuristic Digital Holdings, Jio Digital Distribution Holdings and Jio Digital Cableco Pvt. Ltd.
Seven Subsidiaries to Better Manage Telecom Business
The official remarked about these new subsidiaries, “These subsidiaries would undertake the businesses of broadcasting, broadband internet, wireless, data and hosting services to business and residential, retail customers, cable services distribution, voice over internet protocol and video on demand, among others.”
A mint report informed that according to an analyst creating these many subsidiaries would help Reliance Jio in efficiently managing its content and telecom businesses along with their various segments. An analyst from Mumbai based brokerage said that after creating subsidiaries, like Reliance Industries Limited (RIL) has done in the past; it becomes easier for the company to manage risk and raise capital in the later stages. Further, with RIL’s backing, these companies get a strong foundation, and if they are to be amalgamated back into the holding company, even that becomes feasible, the analyst said.
It’s worth noting that back in October, Reliance Jio’s parent company, RIL has invested Rs 2,290 crore for a 66% stake in Den Networks Ltd and Rs 2,940 crore for a 51.3% stake in Hathway Cable and Datacom Ltd. This new move of buying stakes in the two companies would not only help Reliance Jio GigaFiber expand to 1,100 cities and 50 million homes in India but would also reduce costs for the company while solving the problem of last mile connectivity before the launch of Reliance Jio GigaFiber.
Reliance Jio to Venture Into Other Sectors Including ECom, IT and More
The analysts further added that these subsidiaries in future would also set up and promote ventures including entertainment, e-commerce, telecom, internet, relating to manufacturing of telecom equipment or IT-enabled service industry to name a few. RIL has instated a policy for determining the formation of a potential subsidiary which involves considering whether or not that segment is generating 20% of the consolidated income or net worth of the company.
As per the annual report published by RIL for the year 2017-18, the Mukesh Ambani owned company liquidated or amalgamated 26 subsidiary companies. Also, RIL declared that it is a parent to 84 Indian and 42 foreign subsidiaries. Not only this, but 25 Indian and seven foreign companies are Reliance Industries Limited’s associates, and it also has 20 Indian and five foreign companies as joint ventures.