Microsoft and Mukesh Ambani's Reliance Jio are already partners in India⁠— but Satya Nadella reportedly wants more

Microsoft CEO Satya Nadella and Reliance MD and CEO Mukesh Ambani at CEO's Summit at St Regis Hotel in MumbaiBCCL
  • Microsoft, the world’s most valuable company, is reportedly mulling over investing $2 billion in Mukesh Ambani’s Reliance Jio for a 2.5% stake.
  • The two companies already have a partnership in place with Microsoft’s cloud solution, Azure, hosting Reliance Jio’s data on its servers in India.
  • During a fireside chat in February Ambani told Microsoft CEO Satya Nadella that there is an opportunity for the two companies to enable India’s MSMEs with toolsets and data sets to propel India forward.
Mukesh Ambani has been picking up investments left-and-right during as the coronavirus pandemic takes a swipe at the economy. Now, the world’s most valuable company — Microsoft — may be looking to grab a piece of the pie.

It’s looking to put in as much as $2 billion to pick up a 2.5% stake in Reliance Jio, according to sources that spoke to Hindustan Times. If the deal comes through, this will be the sixth investment in Reliance Jio from a US-based company.

CompanyStake
Facebook9.9%
Silver Lake1.15%
Vista Equity2.23%
General Atlantic1.34%
KKR2.23%

The investment will also go a long way to aid Reliance Jio’s plans to launch an initial public offering (IPO) in the US, which is planned over the next 12 to 24 months, according to Bloomberg.
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For Microsoft, it will be an indirect path to facing off against the likes of Amazon, Walmart and Alphabet with the Ambani-owned enterprise’s access to India’s huge consumer market. Right now, Reliance Jio is India’s largest telecom company with over 387 million subscribers as of May 1.

Microsoft CEO Satya Nadella's first visit to IndiaMicrosoft

Microsoft and Reliance Jio already have a history of friendship
The two companies already have a partnership in place with Microsoft’s cloud platform, Azure, hosting Reliance Jio’s data on its servers in India, which was announced in August 2019. “Out long term partnership combines the power of Azure, Azure AI and Office 365 with Jio’s connectivity and digital solutions, which are among the most used and fast growing in the world,” said Microsoft CEO Satya Nadella at the time.

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Reliance Industries' chairman Mukesh Ambani and Microsoft CEO Satya Nadella during the fireside chat in Feburary 2020Microsoft/YouTube

The relationship between the two grew during a fireside chat in February. “Our opportunity between Jio and Microsoft is to give them [MSMEs] full service, to make sure that they are fully enabled with all the toolsets and data sets. Because the mindset exists to really propel India forward. And, that is an even bigger opportunity than the consumer piece that we have been in the last few years,” Ambani told Nadella.

Reliance Jio is increasing the pace of investments
In the past month, over five investments have been finalised for Reliance Jio with 17.1% of the company now our of Ambani’s hands as he looks to recuperate on his investment and drum down the debt of Reliance Industries — Reliance Jio’s parent company.

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Some speculate that India’s richest man is betting on the tech war between the US and China to beef up his own balance sheet. A US-based IPO would give Reliance Jio and its new partners a better valuation than the Bombay Stock Exchange (BSE).

Mukesh Ambani is looking to reduce Reliance Industries' debt by building up the pace of investments in Reliance JioBCCL

Through JioMart, Reliance Retail’s little brother in e-commerce, Ambani has plans to use Reliance Jio’s network to bring India’s mom-and-pop stores into the digital era. Yesterday, May 27, JioMart went live across 200 Indian cities. “The national roll-out provides customers with a useful alternative to existing players like BigBasket and Grofers as online grocery orders have spiked [during the lockdown], give the fewer store visits,” said Credit Suisse.

Microsoft’s investment may not top what Facebook’s $5.2 billion buy-in earlier in May and nothing is set in stone. A second source told HT that there is no guarantee that the investment will go through.
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It’s not just Microsoft but other international investors, including Abu Dhabi’s Mubadala and Saudi Arabia’s Public Investment Fund (PIF) that are looking to buy up stake. Mubadala, a sovereign wealth fund, is reportedly mulling over investing $1.2 billion in Jio, sources told FT. PIF is looking at a potential investment of $1.5 billion, according to Bloomberg.

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