Enterprise

This Indian telco has raised more than $20 billion during the pandemic

Includes investors like Google, Facebook, and Qualcomm

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The Coronavirus pandemic has forced countries to implement strict lockdowns and curb international travel. Economies have fallen drastically due to lower spendings and rising unemployment. Healthcare has become a priority. Meanwhile, defense, as well as infrastructure costs, have been sidelined.

Work-from-home has become the norm and companies are actively trying to reduce operational costs. Investors have burned a lot of money since startups dependent on the gig economy are the worst hit. Raising funds right now is a herculean task and most start-ups are expected to go out of business in the coming months.

However, one company has taken full advantage of the pandemic-led lockdown. Officially called Jio Platforms, it’s an Indian telecom operator with more than 300 million active users. Dubbed Jio casually, it’s more than just a telecom operator and has managed to raise more than US$ 20 billion within a span of three months. Investors include marquee names like Google, Facebook, Qualcomm, Mubadala (sovereign fund of Abu Dhabi), Vista Equity, and more.

Google has also acquired a stake in Jio for US$ 4.5 billion. It has picked up 7.75 percent in the company, taking the total sale to 32.95 percent. The Google stake sale came to light immediately when the copy was ready for publishing and hence couldn’t be updated.

By Sanuj Bhatia

To be precise, Jio has raised US$ 20 billion from 13 companies by just selling a 25.2 percent stake. Considering the current investments, Jio is roughly valued at more than US$ 60 billion. What’s so special about this company that Facebook decided to splurge US$ 5.7 billion for just 9.99 percent?

India — the most promising market for any internet company

The US has always led the tech race in terms of research and innovation. With a developed economy, the market is self-fulfilling and companies are actively looking for new regions to expand to. The American influence is easily visible in western allies like the European Union, Japan, South Korea, as well as the Philippines.

India, on the other hand, is a developing economy that completely skipped the computer or laptop age and jumped onto the smartphone era. Today, it’s the world’s second-largest smartphone market, and 70 percent of the hardware is dominated by the Chinese. However, most phones run on Google’s Android, and American tech companies have been successful in expanding. This includes Facebook, Amazon, Netflix, Google, and more.

However, the telecom market remains hugely untapped. What will a smartphone do without wireless connectivity?

The rise of Jio and its ripple effects

At the beginning of 2016, 1GB of 3G data cost approximately INR 250 (US$ 3.3). Back then, Jio was completely owned and operated by Reliance Industries. Reliance is an Indian conglomerate that has its foothold in a plethora of segments including oil, retail, entertainment, and more. It’s one of India’s largest companies in terms of market cap and run by billionaire Mukesh Ambani. Just a few days ago, he became the seventh richest person on Earth, overtaking long-time contender Warren Buffet.

In a nutshell, Reliance pumped enough money into Jio and launched it in the middle of 2016. It was India’s first telco to offer pan-India 4G and the tariff was impossible to believe. For the first 6-9 months, unlimited 4G data was offered for free to lure customers from other networks like Airtel, Vodafone, and Idea. Considering Reliance’s backing, the company could afford to.

It also had an inherent advantage over telco’s because it directly rolled out 4G and did not support any previous standards. While other’s were figuring out inter-connection issues between 3G and 4G, Jio had already rolled out VoLTE. Jio only considered data as bandwidth and relied on internet protocol for calls, reducing its operational cost.

Within a year, 1GB of 4G data cost just US$ 0.2. India has the most affordable 4G in the world. Naturally, the competition couldn’t offer these rates without taking a hit on their profit as well as revenues. But, they had no option but to reduce tariffs. Slowly, companies like Aircel went out of business due to unsustainable rates. Vodafone merged with Indian player Idea to form Vodafone-Idea. By the end of 2019, the Indian market had only 3 players left — Jio, Airtel, and Vodafone-Idea.

Keep in mind, Jio has no debt due to its rich parent, Airtel has debt but can offload that with assets and equity, while Vodafone-Idea is on a ventilator. With more than 300 million subscribers, Jio is leading in terms of both, userbase as well as financial health.

Jio’s unique selling point — data

Reliance was planning to enter the telecom industry for a very long time and it saw it’s an opportunity with 4G. While other telcos were busy billing users for calls and SMS, Jio wanted to sell just one thing — more data. And, it came up with its own suite of services that ensured the user consumes more and more data.

India’s data consumption is expected to exceed 11GB by 2022. Although, the tariff has barely increased by 20-25 percent in the last few years. Some estimates are even more optimistic and indicate a 40 percent annual rise.

There’s no doubt that streaming services have changed the whole scenario. But, this is where Jio has an unbeatable offering. Since day one, the company has a suite of apps like Jio News, JioTV, JioCinema, JioSaavn, and even JioMeet. Today, there are 29 apps on the Google Play Store. This ecosystem ensures the user doesn’t have to look elsewhere. And, they are yet to be fully monetized. As a Jio subscriber, they’re pretty much free-to-use at the moment.

Data is the new oil

The suite of apps is mostly made for the end consumer. But, the company has grand plans for the future as well. It has already announced a partnership with WhatsApp to launch JioMart. It’ll onboard physical stores and function as a hyperlocal online shopping experience. A segment that hasn’t really taken-off yet despite investments from Amazon, BigBasket, and Grofers.

Coming to the enterprise side, Jio has acquired a plethora of startups and established companies for their know-how. This includes American telecom-technology company Radisys, Asteria Aerospace, Embibe, Haptik, and Netradyne. The company is poised to lead the 5G race due to its healthy financials and technology innovation. The company has announced it’ll carry out 5G trials based on its own technology and won’t be relying on third-party partners like Huawei.

The company is all set for the 5G future and has equivalent investments in IoT, blockchain, and digital payments. Jio may have started out as a telco, but it’s truly turning out to be a technology company.

The most lucrative technology company

All these factors make Jio a very attractive investment. Facebook tried to enter India with Freebasics and Internet.org but failed miserably. A piece of Jio gives it a chance to explore deeper than ever. For investment companies, the pandemic is a reality check. And, Jio just turned out to be a silver lining. With more and more people working from home, wireless data consumption is bound to rise.

Even companies are realizing work-from-home is a better model in many parts of the business since you can skip expensive property investments. Even if the work-from-home model fizzles out in the coming years, personal consumption will remain largely unaffected. And with India’s developing economy, smartphone penetration is expected to steadily increase. This shall also bring in more data consumption, online shopping, and other related tasks. With Jio covering all the bases, it is perfectly positioned to lead the Indian market.

Lastly, it’s essential to understand why Reliance decided to sell slightly more than 30 percent in Jio. The parent company has a debt to pay-off and its Chairman, Mukesh Ambani, had announced it’ll go debt-free by the end of FY2020. Its most valued business of refining oil has taken a hit due to the pandemic-led crude crash.

It won’t be wise to sell an undervalued asset. At the same time, Jio reached its peak. By giving away a minority stake to a range of partners, Reliance not only raised money but also established global trust and recognition of Jio Platforms.

For the global markets, the indication is clear. India is open for business and there’s huge potential.

Enterprise

TikTok has collected user information illegally

They know who you are

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For months now, the US has hounded TikTok for potentially enabling Chinese cyber espionage. ByteDance, TikTok’s owner, is a Chinese company, making it a prime target for data collection. Of course, despite the numerous warnings, TikTok’s transgressions have only started appearing en masse recently. Today, a new conspiracy adds another drop to the overflowing bucket. Unfortunately, it’s a big one. Apparently, TikTok has collected user information illegally for over a year. TikTok knows who you are.

Reported by the Wall Street Journal, TikTok collected and sent valuable MAC addresses and advertising IDs to ByteDance until around November of last year. Of note, Google prohibits this questionable practice, banning apps that practice the method. However, TikTok applied a layer of encryption that hid the practice from the Play Store.

For the unfamiliar, MAC addresses are much more valuable than IP address. While IP addresses constantly change, MAC addresses are more difficult to alter. Most users will usually cycle through the lifespan of a device without giving their MAC addresses a second thought. However, the MAC address is an incredibly unique identifier for your device. Only you should ideally have that address. That said, TikTok’s sketchy collection tactic is much weightier than normal.

According to TikTok’s policies now, the platform does not collect these identifiers anymore. However, it doesn’t bode well for long-time TikTok users since last year. At its most docile, the practice likely facilitated advertising opportunities for the platform. However, it is still highly illegal to collect that data without permission. If anything, the report will give cybersecurity pundits more ammo against the already struggling company.

More than a week ago, Trump had already signed a ban against the app, giving the platform only until September 15 to divest its American assets over to an American corporation.

SEE ALSO: French privacy watchdog is now probing TikTok

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Enterprise

Apple’s Tim Cook is now worth a billion dollars

Officially a billionaire

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A few years ago, Apple earned the highly distinguished status of becoming a trillion-dollar company. Without pausing to catch its breath, the company is already barreling towards the 2-trillion mark. Coinciding with his company’s success, Apple’s Tim Cook is now worth a billion dollars.

According to Bloomberg’s Billionaires Index, Cook’s net worth has just passed the US$ 1 billion mark just as Apple’s shares substantially grew last week. Just recently, the company announced a 4-in-1 split for its stocks due to the success.

The Apple CEO’s new position in the success column is an interesting one. Unlike his peers in the industry, Cook is one of the few CEOs who did not found his own company. The current leader took over the reins from the late Steve Jobs back in 2011. Since then, Apple’s success skyrocketed to its current status today. Back in 2015, amidst all the riches he acquired, Cook promised to give away most of his money to philanthropic endeavors.

Apple’s recent success is a stroke of good news compared to other big tech companies in the US. Last week, the biggest tech CEOs faced an onslaught of antitrust issues surrounding the tech industry. For example, Facebook’s Mark Zuckerberg failed to defend his bullying and acquiring tactics to stomp competitors down. Though surviving this barrage, Apple is currently facing its own set of issues worldwide, including antitrust issues in the EU and a strange branding lawsuit in Canada.

If the current trend continues, Apple is set to ascend even further up the ranks of tech companies in the near future.

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Enterprise

WeChat ban can sink iPhone sales worldwide

Sinks by up to 30 percent

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Last week, President Donald Trump signed an official executive order banning TikTok and WeChat starting September 15. Though the spotlight is on TikTok, the pending WeChat ban can also impact the technology industry quite heavily. According to an analyst’s report, the WeChat ban can sink iPhone sales worldwide.

According to renowned Apple analyst Ming-Chi Kuo (via MacRumors), the impending ban will determine the iPhone’s fate in the Chinese market. WeChat, a platform owned by Tencent, is a popular messaging app in China. While the app’s presence is drastically lesser in other territories, Chinese immigrants also use the platform to stay in touch with relatives back in China.

If the ban passes, Apple’s App Store can potentially remove the app for all users around the world. Currently, the executive order’s wording is still vague. No one knows if a ban will remove WeChat from American iPhones or all iPhones all over the world.

In the best-case scenario wherein it’s only the US, global iPhone sales will likely drop by up to only 6 percent. This likely pertains to Chinese immigrants in the US. However, in the worst-case scenario wherein iPhones everywhere lose the app, Apple’s sales will sink by up to a whopping 30 percent.

Despite the overwhelming dominance of Chinese brands in China, Apple still retains a sizable share in the country’s market. Compared to last year, the American brand’s market share actually grew in size. If Kuo’s more pessimistic scenario comes to pass, Trump’s orders might have inadvertently doomed Apple’s business in China.

SEE ALSO: Apple is not interested in TikTok

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