India, today, has the lowest mobile data rates in the world- the rates have come down drastically from Rs 268.97 per GB in 2014 to Rs. 11.78 per GB last year. What has triggered this drastic reduction is a major disruptor in the Telecom sector- Reliance Jio which entered the Telecom market in 2016 and single-handedly revolutionised it. The digital arm of the Mukesh Ambani-led Reliance Industries Limited (RIL), Jio Platforms, now seems set to revolutionise the 5G market.
This follows the Trump administration’s decision to cut Huawei off foreign Semiconductor (chip) supplies. Admittedly, this a matter of “survival” for Huawei now. Beijing has just 12 months to save the telecom giant now since its stockpile won’t last for more than a year. Meanwhile, the Boris regime in the UK is pushing D10- an exclusive club of 10 democratic nations to find an alternative Huawei. Jio is one of the few players that can provide indigenous 5G technology.
What the latest pushback means is that the prospective club of 10 democratic countries consisting of the G7 countries- the United States, Canada, Italy, France, Germany, the United Kingdom and Japan, apart from South Korea, Australia and India might end up channelizing investments among their indigenous telecom operators to find a viable and safe alternative to an intrusive Huawei that is riddled with espionage accusations.
Of all the telecom service providers, Jio stands out when it comes to giving Huawei tough competition. It is a promising and purely indigenous player, and has developed its own 5G technology to reduce dependence on foreign firms such as Nokia and Ericsson.
A person familiar with Jio’s 5G ambitions, recently told ET, “We have now developed everything end-to-end around 5G technology. We are more scalable than these vendors and are fully automated since we have our own cloud-native platform. In 5G, we will totally be self-sufficient.”
In fact, Mukesh Ambani has no qualms in pitching his brand as the one that completely cuts down dependence on Chinese components. Recently, when the US President Donald Trump asked Reliance Industries chairman Mukesh Ambani about the 5G plans, Ambani proudly announced, “We’re going to do 5G. We are the only network in the world that doesn’t have a single Chinese component.” To this, Donald Trump said, “Oh that’s good. Put a bid in.”
Ambani is right- only Jio is going towards 5G with zero reliance on Chinese components. In fact, the two big European players- Finland-based Nokia and Sweden-based Ericsson manufacture parts in China. In 2019, the head of government’s 5G panel had told ET, “I am not sure technology from European companies has lesser security problems, than say, a Huawei,” while underscoring that only a locally produced technology can ensure complete infrastructure safety.
This is a critical observation because countries like the United Kingdom, which has retracted from Huawei’s 5G technology after initially allowing it, and Australia, which was among the first to shun Huawei, are concerned about the security issues emanating from China.
The United States too is destroying China’s technology sector led by Huawei because it is concerned about the 5G tech leader’s CCP links that creates espionage and security issues.
When it is clear that Jio is the only telecom major that can provide 5G technology with zero reliance on Chinese components, won’t the democratic front against China led by the Trump administration be tempted to bet on the Indian player instead of any other tech giant dependent on Chinese parts?
In February, the US Attorney General William Barr said that the US and its allies must consider taking a “controlling stake” in Nokia and Ericsson with the aim of counteracting the Chinese tech major Huawei.
Days later, Jio came up with some ambitious plans and Mukesh Ambani announced them before the US President Donald Trump himself. The US might now be considering investing in Jio as against investing in the European companies.
Over the past one month or so, private American equity firms have invested considerably in Jio. First, Mukesh Ambani bagged a major investment deal with Facebook, and four American investment equity firms have invested in the telecom operator ever since. Jio’s worth has shot up by 33 per cent in just more than one month, and Mukesh Ambani himself has become Asia’s richest man. These investments augur well for Jio’s 5G ambitions.
American investments in Jio and crucial geopolitical developments concerning Huawei’s 5G technology have coincided brilliantly for Reliance Jio. The world wants an alternative to the Chinese telecom major, Huawei and there can be no better replacement than Jio that has already proved its mettle in the Indian market and now wants to repeat the same feat in the 5G market.