Jio Financial Services subsidiary announces $4.32 billion telecom equipment purchase
What's the story
JioLeasing Services Ltd (JLSL), a Jio Financial Services subsidiary, has unveiled plans to acquire customer premises equipment, and telecom equipment worth $4.32 billion from Reliance Retail. The procurement is slated to occur over the next two fiscal years, as per a postal ballot notice sent to shareholders for approval. This move is part of JLSL's strategy to enter the Device-as-a-Service (DaaS) business model.
New venture
JLSL to venture into Device-as-a-Service business model
Under the DaaS model, the company will lease telecom devices as well as related services to the customers of Reliance Jio Infocomm. The devices will be procured from Reliance Retail at cost plus margin. This transaction is expected to be one of the largest equipment deals in the Indian telecom sector.
Strategic move
Jio's strategy to boost 5G adoption and subscriber base
Jio aims to make the latest 5G devices more affordable for customers by transitioning to a leasing model via JLSL. This strategy is tipped to attract more subscribers to its network. The transaction will be spread over the financial years ending on March 2025 and March 2026. This move marks a significant shift in Jio's business approach, aiming at expanding its customer base while facilitating access to advanced technology.
Business expansion
Jio Financial Services expands beyond lending
Jio Financial Services, a non-banking financial subsidiary of Reliance Industries, is expanding its business beyond lending. Despite being demerged and listed last year, Reliance still retains over 80% ownership of the company. In addition to the equipment agreement, Jio Financial Services is planning to offer its payment aggregator and gateway services to Jio Platforms and Reliance Retail. This signifies the company's growing interest in diversifying its operations.