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Why buying Ola makes sense for RJio

RJio has done all possible permutations-combinations of integration to blow full scale into the market and hence it can consider buying Ola would not be a waste

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Soma Tah
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Faisal Kawoosa

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RJio is not just gearing up to project itself as another telecom operator in the market. It is rather reinforcing itself as the hub of the Indian digital and connected economy. It is certainly taking the centre stage in what I would like to phrase as the ‘wavelength economy’.

For a connected user it has made the network all powerful not just technically but also loading it with a suite of services. So, besides the basic communication services comprising voice and data, a typical user is going to use this data-expressway to access the services spanning from entertainment/infotainment, healthcare, financial services, retailing (including buying of services) and transportation.

RJio has done all possible permutations-combinations of integrations to blow full scale into the market. The acquisition of Network18, gives it access to enough of assets to offer entertainment as well as infotainment services and also the e-retailing business of Homeshop18. Although, Homeshop18 is not as big as Flipkart or Amazon, but with Reliance’s power capsule, it can emerge as a very big player soon. From the entertainment point of view, they also have Big TV.

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On the financial services side, with a lot of ‘strategic arrangements’ taking place between two Ambani brothers, we might see Reliance Capital also falling soon within the ambit of this ‘strategic arrangement’ between the two brother entities. I would not be surprised even to see a pact on that side too.

At this moment, it is not very clear how it would take on the much expected big opportunity of healthcare in India, especially the ihealth, mhealth or ehealth, whatever one may want to name it. This is perhaps for the reason that we do not have a business present in the country that can give inorganic access to the market for RJio. It could be Vishal Gondal’s GOQii and he might also bring in some gaming products into the RJio ecosystem.

Another area which is a huge opportunity is transportation. Radio Taxi market in India has seen a boom.  Uber, Ola, Meru, Easy Cabs- all are now expanding into different cities and towns. Around the implementation of Odd-Even formula in Delhi, these radio taxis came out with the car pooling feature/service and are now promoting it too, where a private car owner like you and me can also offer the car on the pool. The Association of Radio Taxi India pegs the organized taxi sector to be at US$7 billion by 2020 growing at 25% a year.

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The concept is engulfing other modes of transport like auto rickshaws, buses and other rides too. Auto Rickshaw aggregator Jugnoo is making impressive growth in this segment. Media reports recently suggested that it completed US$5.5 mn in Series-B round of funding and has 2 million users with approximate 30,000 transactions a day.

This is definitely a sector that RJio cannot ignore and it has a massive opportunity to enable this service over its network. Among all the players present, Uber and Ola as the best possible services that RJio could think of acquiring for inorganic presence. Uber, being a global brand, would not be too inclined for selling of its India business and in this scenario it is only left with the option of considering Ola. There are other options too before RJio, but, they won’t be able to offer them the base and reputation that Ola has. These are very critical for the value proposition that RJio is likely to bring to the table and even if it requires RJio to shell out a bit of premium to consider Ola, it won’t be a waste.

The author is Lead Analyst- Telecoms and SemiTronics, CMR

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