Mukesh Ambani’s Jio Financial Services is set to acquire telecom equipment worth Rs 36,000 crore from Reliance Industries’ retail division, JLSL, for its device leasing market.
For its leasing company to purchase telecom equipment and gadgets worth Rs 36,000 crore ($4.33 billion) from Reliance Retail Ltd., the retail division of Reliance Industries, Mukesh Ambani’s Jio Financial Services (JFS) is expected to ask shareholders for permission.
A wholly-owned subsidiary of JFS, Jio Leasing Services Limited (JLSL), intends to go into the device leasing market. The equipment will be used for broadband wireless access and other services.
“JLSL is going to operate a lease using the Device-as-a-Service (DaaS) paradigm. In the modern era of service models, Device as a Service (DaaS) allows companies or individuals to lease certain products along with related services instead of buying the equipment altogether,” as stated in a JFS postal ballot notice to shareholders.
Installation, maintenance support, and occasionally other services like updates are all included with DaaS.
Reliance Industries Ltd.’s step-down subsidiary is called Reliance Retail. Reliance Retail Ventures Ltd, which owns 100% of Reliance Retail, is owned by RIL to the value of 83.56%. Devices and related equipment are what Reliance Retail deals in.
The postal ballot notification states that JLSL would buy telecom equipment and customer premises equipment/devices from Reliance Retail Ltd (RRL). Customers of Reliance Jio Infocomm Ltd. will be able to lease gadgets and telecom equipment from JLSL.
The previous transactions will be carried out at cost plus margin, and the suggested arrangements are meant to be ongoing commercial dealings.
The business is requesting permission from shareholders for transactions that will take place in its two fiscal years, 2024–2025 (FY25) and 2025–2026 (FY26).
The projected monetary value of the transactions, which would be carried out across FY25 and FY26, is Rs 36,000 crore.
The notification to shareholders stated that the distribution of purchases over the two years would be reliant upon the rate at which broadband wireless devices are deployed and the consumption of services.
For related party transactions that surpass Rs 1,000 crore and 10% of the annual consolidated sales in a financial year, listed businesses are required to get shareholder approval. In FY23, the company’s annual audited consolidated turnover was Rs 41.63 crore, and in FY24, it was Rs 1,853.88 crore.
Dealing in enterprise devices, communication devices, and equipment for client premises is what RRL does. Because of its massive volume, it can purchase these things at reasonable pricing. According to the notification, RRL will provide these devices to JLSL at cost plus an agreed margin.
Jio FS functions across four main categories: investments, payments, protection, and loans and leasing. It has begun offering vendor financing in the lending and leasing market and intends to expand into house loans, loans secured by real estate, and loans secured by mutual funds.
According to an investor presentation, the leasing segment’s goal under the DaaS model is to create a modern service model for consumer products that targets, among other things, solar panels, EV batteries, phones, laptops, and AirFiber.
ABOUT THE DEAL
Financial unit Jio Jio Leasing Services for purchasing telecom gear and equipment, such as cell phones and routers
to lease the equipment it purchases to Reliance Jio Infocomm clients
Jio Financial is asking for shareholder permission before moving further with certain deals in FY25 and FY26.
to compete with companies like Lenovo and Hewlett Packard in the gadget rental sector