Reliance AGM: From 5G smartphones to Aramco deal and more, what to expect tomorrow?

The annual shareholder meetings of Reliance Industries have always been grand affairs. There was a time when the AGMs used to be held in a stadium in Mumbai and the founder, Dhirubhai Ambani, used to take the podium in the centre. Over the years, the meetings moved to an auditorium, but the aura around them and investors’ enthusiasm to attend them remained the same. The auditorium’s are jam-packed and every major announcement by Mukesh Ambani is welcomed with a thunderous applause. Unfortunately, due to the COVID-19 pandemic, this will be the second year that the AGM is held virtually. But there should be no dearth of big announcements.

In the last few years, the AGM has been the centre stage for major announcements. In 2017, the Jio feature phone was announced at effectively Rs zero. The Jio Phone 2 followed in 2018. Its entry into high-speed fiber internet through Jio GigaFiber was also announced that year. In 2019, apart from announcing the launch of GigaFiber and detailing the various plans, the highlight was the plan to sell a 20 per cent stake in RIL’s oil-to-chemical business to Saudi Arabia’s Aramco. Last year, Google’s announcement to invest Rs 33,737 crore to pick up 7.7 per cent stake in Jio Platforms took the centre stage.

Investors will surely be looking forward to more big bang announcements in the AGM on Thursday afternoon. While there will always be something new to look forward to, investors will be keen to get updates on some of the earlier announcements as well.

Inexpensive 5G smartphone

Last year, as a part of the investment from Google in Jio Platforms, the two also entered into a commercial agreement to jointly develop an entry level affordable smartphone with optimisations to the Android operating system and the Play Store.

“I am excited that our joint collaboration will focus on increasing access for hundreds of millions of Indians who don’t currently own a smartphone while improving the mobile experience for all,” Sundar Pichai, the CEO of Google, had said then.

India’s entry-level and budget smartphone market is dominated by Chinese companies such as Xiaomi, Realme, apart from Korea’s Samsung. An affordable 5G smartphone by the Jio-Google partnership could well shake up this market. The expectation is that the affordable 5G phone will be unveiled on Thursday. The market is also keenly watching out for the pricing of the phone and Jio tariff plans.

However, its actual launch in the market may well be a few months away, given chip shortage being faced by the industry, apart from other supply-disruptions caused by COVID-19, according to a recent Bloomberg report citing unnamed people.

Beyond the phone itself, Ambani is expected to give an update on the rollout of 5G. The company had announced last year, it has indigenously designed and developed 5G capabilities. It has recently begun 5G trials in Mumbai. There may be further announcements about conducting trials in other parts of the country in this year’s AGM.

Aramco deal

In 2019, Reliance had announced Saudi Aramco would be acquiring a 20 per cent stake in the oil-to-chemical business. The deal is yet to go through though, delayed in part due to the pandemic and the impact it had on oil prices last year; investors will be awaiting to know what’s next.

A recent report by a foreign brokerage has indicated that RIL may announce Yasir Al-Rumayyan, chairman of Saudi Aramco and governor of Saudi Arabia’s wealth fund Public Investment Fund, as a director on the company’s board. RIL hasn’t issued any clarification on that front so far.

The company has already begun the process to reorganise its oil-to-chemical (O2C) business into a separate subsidiary in the 2020-21 financial year. “The reorganisation will facilitate value creation through strategic partnerships and attract a dedicated pool of investor capital,” RIL said in its annual report.

The company has also announced plans to expand into a new energy and new materials business. So, it will aim to complement traditional fuels with clean electricity and hydrogen, and build an optimal mix of reliable, clean and affordable energy and storage using solar, wind and batteries, it added in the annual report.

Whenever RIL has announced any new projects, it has committed huge investments to it. Be it through its own capital expenditure or by raising funds from marquee investors. Further announcements on the Aramco deal as well as on the new energy and materials front are expected in the AGM.

Reliance Retail

Last year during the pandemic, Reliance Retail rolled out its own e-commerce service JioMart to take on incumbents like Amazon, Flipkart and BigBasket. A larger integration of JioMart through its partnership with Facebook and WhatsApp is expected now. RIL has already created a digital ecosystem that includes JioMart, Ajio.com, the JioSaavn music streaming app and Jio TV. It could reveal its plans for a super app that  integrates all these various services. The Tata Group has already announced plans to build a super app and as a part of this plan, Tata Digital recently acquired the grocery e-tailer BigBasket.

“We believe retail business (including e-commerce) is set to be the next growth engine for RIL, with potential for retail EBITDA to grow 10 times over the next 10 years. During the macro downturn, RIL has focused on building strong digital capabilities and we believe the scale-up in omni-channel offering is driving sizeable market share wins,” analysts at Goldman Sachs wrote this week.