Intel Invest in Jio Platforms: A Chance For Redemption In The Smartphone Market?

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If you thought Mukesh Ambani was finally going to stop the stake selling spree in Jio Platforms after RIL was recently announced debt-free, then you were wrong.

Intel Corporation, the global tech and semiconductor major, via its investment arm known as Intel Capital, recently became the 11th investor in Jio Platforms. It has been reported that the company will be picking up 0.39% equity stake for Rs. 1,894.50 crore. This deal was made possible by Morgan Stanley who acted as financial advisor to Reliance Industries and AZB & Partners and Davis Polk & Wardwell who acted as legal counsels.

After this particular investment from Intel, the total investments in the Jio Platforms currently stands at Rs 117,588.45 crore for 25.09% holding.

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On Friday, Reliance, in a statement has revealed that the equity value of Jio Platforms after this latest investment is estimated to be Rs 4.91 lakh crore whereas the enterprise value is at Rs 5.16 lakh crore. As of now, the transaction is subjected to regulatory and other customary approvals.

Jio Platforms prior to this investment had already raised a significant amount of money from a total of 10 global entities for a whopping 24.70% stake for Rs 1.16 lakh crore. It was these investments along with rights issue of Rs 53,124 crore that made RIL debt-free quite recently.

Source: GraphFarm

The other investors include the social media behemoth Facebook, two largest sovereign investment arms of Abu Dhabi- the Abu Dhabi Investment Authority and Mubadala, private equity firms Silver Lake, Vista Equity Partners, General Atlantic, KKR, TPG, L Catterton and Saudi Arabia’s Public Investment Fund (PIF).

It should also be noted that the Competition Commission of India (CCI) which was probing into the Jio-Facebook deal for Rs 43,574 crore has finally approved and greenlit it.

Acquiring Stake In Jio: A Chance Of Redemption For Intel?

Intel Capital happens to invest in global innovative companies which are focus on disruptive technology areas such as cloud computing, artificial intelligence and 5G. Acquiring this minority stake in Jio is something that is going to be extremely beneficial to the Intel Corporation as Reliance Jio is a ‘5G-ready’ telecom provider which is waiting to foray into this space as soon as the opportunity presents itself.

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According to some sources, Jio has reportedly applied for a lab testing for 5G with DoT aka Department of Telecommunications some weeks ago.

This investment is a great opportunity for Intel Corporation to finally start establishing its stronghold in the smartphone market space by offering processors for 5G enabled smartphones. Intel. so far, has lost the smartphone market completely to Qualcomm which has been enforcing ruthless licensing and purchasing terms that made it effectively impossible for manufacturers to offer Intel-based mobile devices. One of the other main reasons behind the failure of Intel was not willing to risk upsetting the economic model that had initially helped it transformed into a titan of computing. 

The manufacturing strategies and resources of the company were always geared towards large, expensive processors, not churning out huge numbers of low-cost mobile cores. Intel’s post-launch attitude towards its Atom processors was not great as well. While the chip happened to go through several revisions to integrate components and reduce costs, Intel continuously refused to commit the resources that would have made Atom a best-in-class player in the mobile market. This is why, in 2006, the company had to finally decide to put the communications-chip business up for sale.

Hopefully, now Intel has had the time to reevaluate their strategies and they are going to leverage this recent acquiring of a stake in Jio Platforms to relaunch themselves into the smartphone market with new vigour. We will keep you posted on all future developments. Until then stay tuned

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