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Comment by snowwrestler | Hacker News Reader

> Within a span of four years, Reliance pumped in over $33 billion from its other businesses to expand Jio’s market.

> Jio was able to achieve these cheap rates by acquiring the only firm that won a pan-India 4G license, leveraging the superiority and cost-efficiency of 4G compared to older cellular standards, and because of the unparalleled size and resources of its parent company. [emphasis mine]

> A sizable portion of the investments will go toward paying off the existing debts accumulated by Reliance to fund this extravagant project and its other businesses,

Reading between the lines in this article, it sounds like Reliance is simply buying market share by running Jio at a big loss, and temporarily making up the difference with huge investment rounds. I feel like we've seen this show a lot lately and it doesn't always work out.

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You are right in your analysis. Jio is using a different accounting approach to show that they are profitable. One - Their depreciation model is non-standard vs. what is used by other telecom companies & Two - They are booking the sales of subsidized devices under their retail subsidy - Reliance retail. If there is someone who understand this better, I would like to get more insight.

https://economictimes.indiatimes.com/industry/telecom/teleco...

So it is fraud?! Pretending you have a profitable business by hiding spiraling debt and other cost in a separate entity.

No. Jio (and Reliance) have actual paying users who are given genuine services that generate actual genuine revenue. And I doubt that the debt is going to spiral anywhere. Most of that debt was a one time deal to create a nationwide greenfield network.

Yes, but don't forget that "Ambani family have close ties to the ruling government" and also Jio is "the only firm that won a pan-India 4G license, leveraging the superiority and cost-efficiency of 4G".

I'm super curious what technical reasons mandate that there can be only one 4G license in a country with 1.4 billion people. And how that affects competition in a country that has Corruption Perception Index equal to that of Morocco, Ghana, China or Benin.

edit: formatting

You seem to be insinuating that Jio is the only telecom that was given special all-India spectrum. And that is false. All the spectrum was offloaded in public auctions were everyone participated and bought spectrum.

Jio is not the only telecom in India with 4g spectrum or services. I personally use Airtel, and I get 4g everywhere I go without issues.

>I'm super curious what technical reasons mandate that there can be only one 4G license in a country with 1.4 billion people.

The confusion you have seems to stem from the fact that Jio advertises itself as India's only full 4g network. What that means is that the greenfield network build by Jio only uses and supports 4g networks and not the older 2g and 3g networks. So in other words, the Jio network is 4g exclusive for it's customers.

The older telecom are older and still operate old 2g and 3g networks so they cannot market themselves that way

I simply quoted the original article

TLDR version : Corruption can only get you so far but to become world class you need to be very good at what you do.

Longer version : Reliance/Ambani family have ties to pretty much the entire political spectrum in India and not just the current govt. This is one of the reasons why they have thrived since 70s when the group was started by Mukesh Ambani's (current CMD) father Dhirubhai. But this is not the only reason they have thrived, they started with polyester and captured the entire upstream upto crude refining. The Jamnagar refinery project was started in the 90s and was setup under the supervision of Mukesh. It is the largest refining complex in the world with some of the best refining margins in the world. Aramco almost bought a 20% stake in it recently, a deal which got suspended because of Covid.

As far as the pan India 4G license goes, it came at a time when others were still topping up their 2G and 3G licenses which were selling at a much higher premium due to the competition. It wasn't as if it was not on offer to others, it just did not make business sense for them at the time. And the license was auctioned around 2009-2010 while the current government only came to power in 2014. The conversion of pan India broadband license to 4G also happened before 2014. Heck, I remember seeing the Jio backbone OFC cables being laid in multiple cities before 2014. Corruption at the highest level (multiple cases involving multiple ministries, even reaching the Prime Minister) was one of the main reasons the previous UPA govt was routed in 2014.

Ref : https://web.archive.org/web/20130606064256/http://www.ground... https://economictimes.indiatimes.com/industry/energy/oil-gas...).

There are multiple 4G licenses in India. Jio just has a majority in market share.

> Ambani family have close ties to the ruling government"

Source?

Source: https://in.reuters.com/article/india-election-ambani/indias-...

It totally contradicts the original comment.

>>> by acquiring the only firm that won a pan-India 4G license.

IIRC, that farm was simply a proxy with some back channel deals. Parent Company didn’t want their names in auction, that would have made the auction much more expensive. So they acquired the spectrum trough a front-face farm and later acquired it.

AFAIK the original purchase was much cheaper because the spectrum was assigned for IPTV, not telephony. The government later 'regularized' it, that being a euphemism for being bribed enough to change the allowed use of the spectrum.

Correct, here is a well researched article from 2016. https://thewire.in/tech/the-immaculate-conception-of-relianc...

That was Jio's strategy in the early days, but they're already quite profitable (~US$500MM in Q2) and trending upwards.

https://www.business-standard.com/article/companies/reliance...

Seems it works for them just fine. Amazon had a similar strategies while being a lot smaller at the time. You need multiple revenue streams to really push for market dominance.

Isn't that what every early stage SV company does? Spend investor money to acquire and engage audience?

Yes and 99% of them go bankrupt when unable to return profits

Except Jio's parent company is an extremely profitable entity in a sector with certain demand and deep rooted relationships with the government

Yes Cronyism will help them for sure. Lets see

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