Reliance Retail’s Telecom Gear Unit Sold for $4.32 Billion to Jio Financial

Jio Financial Services Enters Device-as-a-Service Model with $4.32 Billion Reliance Retail Deal

In a significant move, Jio Leasing Services Ltd. (JLSL), a subsidiary of Jio Financial Services, is planning to acquire customer premises equipment, devices, and telecom equipment worth $4.32 billion from Reliance Retail over the next two financial years. The deal, which requires shareholder approval, will see JLSL operate a Device-as-a-Service (DaaS) model, leasing telecom devices along with associated services to customers of Reliance Jio Infocomm.

Key Highlights of the Deal

• Acquisition Value: $4.32 billion
• Deal Period: Financial years ending March 2025 and March 2026
• DaaS Model: JLSL will lease telecom devices, including laptops and mobile hotspots like AirFiber, to businesses
• Reliance Retail Role: Will sell the devices to JLSL at cost plus margin

What is Device-as-a-Service (DaaS)?

Device-as-a-Service (DaaS) is a business model where companies lease or rent out hardware and software solutions to customers. This model allows businesses to access the latest technology without having to bear the upfront costs of purchasing equipment.

Jio Financial Services’ Growing Interest in Non-Lending Businesses

The deal signifies Jio Financial Services’ growing interest in non-lending businesses, marking a significant expansion from its traditional financial services role. The company plans to offer payment aggregator and gateway services to Jio Platforms and Reliance Retail, further underscoring its commitment to diversification.

Implications of the Deal

The multi-billion dollar equipment acquisition deal is expected to be one of the largest in the Indian telecom sector, transforming the way customers access telecom devices. By adopting a leasing model through JLSL, Jio aims to make it more affordable for consumers to get access to the latest 5G devices and attract more subscribers to its network.

Background on Jio Financial Services

Jio Financial Services, previously a little-known non-bank financial subsidiary of Reliance Industries, emerged as a standalone entity after being listed last year. The conglomerate still owns over 80% of the company, indicating a strong commitment to its growth and development.

Reliance Retail’s Valuation and Role in the Deal

Reliance Retail, valued at approximately $100 billion in 2023, will sell devices to JLSL at cost plus margin. This deal underscores the strategic partnership between Jio Financial Services and Reliance Retail, with both entities working together to expand their offerings.

Future Outlook for DaaS Model

The adoption of a DaaS model by Jio Leasing Services Ltd. (JLSL) marks a significant shift in the Indian telecom sector, potentially changing the way businesses access hardware and software solutions. As JLSL looks to lease devices like laptops and mobile hotspots to businesses, it will be interesting to see how this deal impacts the industry as a whole.

Conclusion

The proposed acquisition of $4.32 billion worth of equipment by Jio Leasing Services Ltd. (JLSL) from Reliance Retail marks a significant milestone for Jio Financial Services, underscoring its growing interest in non-lending businesses. The deal is expected to have far-reaching implications for the Indian telecom sector, potentially changing the way customers access telecom devices.

Related Topics

• Enterprise
• India
• Jio Financial Services
• Reliance Jio
• Reliance Retail

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