The best day for Mukesh Ambani's Reliance Industries in a decade was a bad one for its rivals

Business Insider India

  • After the 42nd Reliance Industries Limited (RIL) Annual General meeting yesterday, the company's stocks at trading at an 11% high today.
  • Chairman of RIL, Mukesh Ambani, announced the upcoming launch of Jio Fiber and its many features which has left its competitors in a lurch.
  • As a result, companies like Airtel, Tata Communications, PVR cinemas and Vodafone Idea are trading in the red.
Reliance Industries Limited (RIL) saw the biggest intraday rise in its share price today driving shares up by 12% and taking the benchmark indices like Sensex and Nifty along with it. Nearly half of all stocks on these indices are in red but heavyweight Reliance alone has managed to keep mood afloat.

The spike in RIL's share price has put it back in the race of becoming the highest valued Indian company trailing behind Tata Consultancy Services (TCS) by $1 billion.

However, RIL's gains have come at a huge loss for many of its competitors in many different sectors. Chairman Mukesh Ambani's speech laid out his vision for the company and every plan of his came as a threat to one existing company or the other.

Given its size, scale, its pile of cash and Ambani's deep pockets, anyone competing with Reliance Industries is expected to have a tough time.

Jio Fibre, the frontier

Ambani announced that Jio Fiber will be launching commercially starting 5 September 2019 with plans that start at ₹700 with a minimum speed of 100 Mbps. Jio's competitors, Airtel and Vodafone Idea, are already feeling the pressure with their stocks taking a dip when the markets opened today morning.

But both Airtel and Vodafone Idea have more to fear than just Jio Fibre.

The Aramco energy

Jio's mobile phone services has about 340 million subscribers as of now. Ambani is targeting to take this number to over 500 million over the next few months.

That would mean Jio will remain an aggressive player in the market and that's bad news for other players like Airtel and Vodafone Idea.

Given that RIL is getting additional cash from Aramco and BP, and if it becomes a zero net debt company by March 2021, the company of its size and scale will only have more money to muscle out other players with its aggressive pricing.

Other telcos are already in deep trouble after having fought Jio in the market for nearly three years with higher discounts, funded by higher debt.


StockImpact
Airtel-5.28%
Vodafone Idea-6.54%

Movie theaters feel the heat


Ambani also announced that the Jio Fiber service will also include a feature called ‘First Day First Show'. Essentially, you'll be able to watch a film at home, the same time as it releases in theaters.

Inox, responded to Ambani's announcement by stating that multiplex owners have exclusive theatrical window of eight weeks before a movie can be released on any other platform. Something, they point out, that is followed internationally.

"We strongly believe that Indian move watchers' love for cinema on giant screen is deep rooted and unshakeable," the company said.

StockImpact
PVR-4.10%
Inox Leisure Limited-4.11%

And, then there's television

The Jio Fiber service will come bundled with a 4K LED television and a set top box for premium customers. Ambani also said that he will throw in OTT subscriptions at no additional cost.

So, it's your OTT services, cable services and broadband along with new devices — all wrapped into one. That would dwarf the current offerings from companies like Tata Communications, the company behind Tata Sky, and Dish TV.

StockImpact
Tata Communications-4.3%
Dish TV-3.21%

See also:
The Indian rupee is falling fast-- and there are both winners and losers

Mukesh Ambani plans to connect a billion devices on his IoT platform — and he isn't only talking about light bulbs

Mukesh Ambani's speech at the Reliance Industries AGM had ten big takeaways

Reliance Jio fired up as Mukesh Ambani joins hands with Satya Nadella’s Microsoft to challenge Jeff Bezos in India



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