Jio Financial Services (JFS) is seeking approval from shareholders to purchase equipment worth 360 billion rupees ($4.33 billion) from the retail arm of Reliance Industries.
This move comes as JFS is seeking approval from shareholders to expand its business into device leasing, as per a recent postal ballot notice.
Under the proposed plan, JFS’s unit, Jio Leasing Services, aims to purchase telecom equipment like routers and cell phones from Reliance Industries’ retail arm.
Although the notice, dated March 18, did not specify the exact products, Jio Financial’s move reflects its strategic shift since being spun out of the Reliance Group led by Mukesh Ambani.
According to Reuters, Jio Leasing Services plans to lease equipment to customers of Reliance Jio Infocomm, the telecommunications arm of Reliance.
This move positions JFS to compete in the device-rental market alongside established players like Hewlett Packard and Lenovo.
The voting on proposed items in the notice will conclude by June 22, 2024, with the deal expected to be finalized in the financial years 2025 and 2026.
Additionally, the company is seeking approval from shareholders to raise the foreign direct investment limit in the company to 49%.
This step marks a significant milestone in JFS’ journey towards diversification and expansion in the evolving telecommunications landscape.
Jio Financial Services, once a lesser-known financial arm of Reliance Industries, gained prominence after being spun off and listed last year. Despite this, Reliance still retains over 80% ownership.
The company intends to expand its services to Jio Platforms and Reliance Retail, offering payment aggregation and gateway services, as mentioned in the notice.
This move underlines Jio Financial Services’ expanding ventures beyond traditional lending. Through a Device-as-a-Service (DaaS) model, it plans to lease devices such as laptops and its mobile hotspot AirFiber to businesses, showcasing its diversification strategy.
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In the Device-as-a-Service (DaaS) model, services like installation, maintenance, support, and updates are usually included.
Reliance Retail will acquire these devices at competitive prices, leveraging its large volumes, and supply them to JLSL with an added cost-plus margin, as expressed in the filing.
JLSL, in return, will furnish Customer Premises Equipment (CPE) and devices to Reliance Jio customers utilizing wireless broadband connectivity and other services.
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