The Rs 5,655 crore ($750 million) investment by US private equity investor Silver Lake for a 1.15% stake in Jio Platforms will help Reliance Industries (RIL) pare its net debt, currently at 1.6 lakh crore. It also puts Jio Platforms in the elite company of Airbnb, Alibaba, Ant Financial, Alphabet’s Verily and Waymo units, Dell Technologies, Twitter- all businesses backed by the global tech investor giant. This association is expected to boost the quality and technological capabilities of Jio Platforms.

Together with the $5.8 billion infusion by Facebook, announced on April 21, the equity inflow into Jio Platforms is now $6.4 billion. The Silver Lake infusion values it at an equity value of Rs 4.90 lakh crore, a 12.5% premium to valuation of Rs 4.62 lakh crore post the Facebook investment.

The money will come in handy. Although Reliance Jio’s operating cash flows jumped 149% year-on-year in FY20, thanks to a big jump in the operating profits and lower working capital investments, the higher capex of Rs 67,200 crore resulted in a negative free cash flow of Rs 50,700 crore. Over the past five years, Reliance Jio has reported a negative free cash flow of $24bn, analysts at Jefferies noted.

Moreover,analysts at JP Morgan pointed out that RIL’s organic free cash flow generation for FY21 could be impacted and if the reported capex continues to be in the range of Rs 60,000-80,000 crore it would be FCF-negative again in FY21E.

The rise in Jio’s ARPU (average revenue per user) during Q4FY20 was lacklustre, analysts said despite the fairly sharp 14-53% hike in tariffs in early December. However, the addition to net subscriptions was up 18% at 17 million allaying concerns that the discipline in tariffs might not sustain. The lower level of churn, analysts at Jefferies noted, reflect Jio’s 7-20% discount to tariffs of Bharti Airtel’s even after the hikes.

The RIL management has said it would like to be debt-free by 2020. Moody’s Investors Service has observed that including the recently announced rights issue ($7 billion) and the investments by Silver Lake and Facebook Inc, RIL has announced initiatives that could reduce net debt by about $13.6 billion from reported net debt of $21.4 billion as on March 31, 2020.