RIL’s digital business rejig to bring platform apps onto investor radar, say analysts

The new structure will also create the largest digital services platform company in India.

Reliance Industries’ move to create a new subsidiary combining all digital initiatives will make the digital platform increasingly attractive to potential investors, according to analysts. RIL’s restructuring of telecom/ digital business raises focus on asset monetisation and debt reduction, Morgan Stanley said.

“Consolidated debt remains unchanged, but platform apps move onto investor radar, clarity on corporate structure improves and interest capitalization concerns lessen,” Morgan Stanley said in a report on Monday. IIFL Institutional Equities in a recent report said the move, which involves transferring telecom venture Reliance Jio’s debt to parent balancesheet, should make digital platform “increasingly attractive to potential strategic investor”.

Reliance Industries Ltd (RIL) last week announced it will set up a new subsidiary to bring all its digital initiatives and apps under a single entity, and infuse Rs 1.08 lakh crore equity into this new unit.

The new structure will also create the largest digital services platform company in India. The new entity will continue to work on technologies in areas like healthcare and education, while also looking at next-gen competencies like artificial intelligence, Blockchain, virtual and augmented reality, among others.

It will also bring into its fold Reliance’s consumer-focussed digital offerings like MyJio, JioTV, JioCinema, JioNews and JioSaavn, while enabling Reliance Jio to become “virtually net debt free” by March 31, 2020 (excluding spectrum liabilities).