Desi Talk – that’s all you need to know 17 BUSINESS January 8, 2021 Ambani Sold A Tech Dream For $27 Billion — Now He Has To Deliver M ukesh Ambani spent much of 2020 convinc- ing Facebook, Google and a clutch ofWall Street heavyweights to buy into his vision for one of the world’s most ambitious corporate transformations. Now flush with $27 billion in fresh capital, Asia’s richest man is under pressure to deliver. The 63-year-old Indian tycoon is focused on a handful of priorities as he tries to turn Reliance Industries from an old-economy conglomerate into a technology and e-commerce titan, according to recent public statements and people familiar with the com- pany’s plans. These include developing products for the an- ticipated roll-out next year of a local 5G network; incorporating Facebook’sWhatsApp payments service into Reliance’s digital platform; and integrating the company’s e-commerce offerings with a network of physical mom-and-pop shops across the country. Am- bani is also pushing forward with plans to sell a stake in Reliance’s oil and petrochemical units, a deal he had originally hoped would reduce debt and finance his high-tech pivot earlier this year. Investors are watching Ambani’s every move as he overhauls his empire —with a market value of $178 billion — in the middle of a pandemic, wading into highly competitive industries and taking on rivals from toWalmart. Reliance shares rose as much as 55% this year to an all-time high in September, but they’ve since pared gains as stakeholders look for more evidence that Ambani can execute. “The jury is out,” said Nandan Nilekani, who co- founded Infosys in 1981 and now serves as chairman of the Bangalore-based software services provider valued at about $73 billion. “There’s a lot of work to be done.” A spokesman for Mumbai-based Reliance Industries declined to comment for this story. While Ambani has publicly embraced his new partnerships with investors including Facebook (he and Mark Zuckerberg traded compliments during a livestreamed conversation on Dec. 15), the Indian ty- coon’s fundraising spree was initially meant to be more of a Plan B. His original goal was to sell a 20% stake in Reliance’s oil and petrochemicals division to Saudi Ara- bian Oil, at an enterprise value of $75 billion, implying a $15 billion valuation for the stake. The Aramco deal, first announced in August 2019, was supposed to help Ambani deliver on a pledge to get rid of his company’s $22 billion in net debt in 18 months. But as talks with the Saudis stalled, Reliance investors grew more anxious. The stock tumbled more than 40% in the three months through March 23. Ambani, who had begun exploring stake sales in his digital services and retail units months earlier, decided to accelerate those talks after the Aramco deal hit a wall, people familiar with the matter said. The re- sponse from investors exceeded the company’s expec- tations, one of the people said, with big-name backers including KKR & Co., Silver Lake and Mubadala Invest- ment committing more than $20 billion to the digital business and $6.4 billion to retail. Reliance declared itself free of net debt in June, nine months before its self- imposed deadline and Reliance’s shares surged. At Reliance’s annual shareholder meeting in July, Ambani and his eldest children Isha and Akash sketched out the broad thrust of their high-tech ambitions. Among the new services they touted was a 5G wireless network as early as next year and a video-streaming platform that will bring Netflix, Disney+ Hotstar, Ama- zon Prime Video and dozens of TV channels under one umbrella. Reliance’s digital unit, Jio Platforms, will also de- velop a portfolio of technology solutions and apps for India’s millions of micro, small and medium businesses, Ambani said, adding that he plans to eventually expand the platform overseas. “The time has come for a truly global digital product and services company to emerge from India,” Ambani told shareholders. The company’s biggest priority for 2021 is 5G, peo- ple familiar with the matter said. While regulators have yet to auction rights to India’s next-generation airwaves, Ambani said this month that his company “will pioneer the 5G revolution in India in the second half of 2021.” Reliance is planning to showcase its lineup of 5G products at next year’s shareholder meeting, which typi- cally takes place sometime between July and September, one of the people said. The company is also working with Google on an Android-based $54 smartphone, part of the strategy to get more Indians to use mobile data for services including streaming video, online games and shopping. Reliance views the integration withWhatsApp’s recently approved payments system as a crucial step in the development of its online shopping services, the people said. The companies are working together as Reliance’s e-commerce platforms look to tap hundreds of millions of Facebook, WhatsApp and Instagram users. Ambani’s biggest challenge now is to earn a return on these investments, said James Crabtree, author of “The Billionaire Raj: A Journey Through India’s New Gilded Age.” The industries Ambani is targeting are constantly evolving, much more so than the refining and petro- chemicals businesses that still account for a bulk of Reliance’s revenue. “He’s got to get it right over and over again,” Crabtree said. There’s also the challenge of “key man” risk. Ambani — the face of Reliance — isn’t getting any younger. While the company hasn’t publicly disclosed a succes- sion plan, India’s Mint newspaper reported in August that Ambani, whose net worth is about $77 billion, is setting up a family council and aims to complete suc- cession planning by the end of next year. “Any large, single-pillar edifice has major inherent risks,” said Kavil Ramachandran, executive director of the Thomas Schmidheiny Centre for Family Enter- prise at the Indian School of Business.Ambani sup- porters point to his recent track record of disruption. He famously upended India’s telecommunications industry four years ago by offering free calls and cheap data, pushing some rivals into bankruptcy. His wireless carrier, Reliance Jio Infocomm, now has more than 400 million subscribers. “Mukesh has been a big part of this wave of innova- tion,” said Sundar Pichai, chief executive officer of Alphabet, which owns Google. “His vision and focus of a future where every Indian can benefit from the opportunities technology creates is really exciting to us and we are glad to be a partner in that work.” Ambani has also positioned his empire as a poten- tial asset for an Indian government that’s keen for ways to counter the growing technological might of China, especially after deadly border clashes between the long- time rivals this year. Ambani has repeatedly highlighted how Reliance’s goals align with those of Prime Minister Narendra Modi’s government, which has called for homegrown solutions to bridge the country’s yawning digital divide. While Infosys’s Nilekani cautions that it’s too early to declare Reliance’s transformation a success, he’s opti- mistic that Ambani will pull it off. “He has a terrific eye for execution,” Nilekani said. “He looks at the big picture while at the same time get- ting into every minor detail, much like Jeff Bezos. They are both unique. Neither man is known to give up.” -Bloomberg By Anto Antony,P R Sanjai,Saritha Rai Advertisements for Jio Platforms, the mobile network of Reliance Industries, are displayed at Marine Drive in Mumbai, India, on Tuesday, July 14, 2020. Sundar Pichai, chief executive officer of Alphabet, gestures while speaking during a discussion on artificial intelligence at the Bruegel European economic think tank in Brussels, Belgium, on Monday, Jan. 20, 2020. Nandan Nilekani, co-founder and chairman of Infosys, poses for a photograph in Bengaluru, India, on Wednesday, Oct. 24, 2019. Bloomberg photo byDhiraj Singh Bloomberg photo byGeertVandenWijngaert. Bloomberg photo bySamyuktaLakshmi