Right from my childhood I have been reading about the deal maker “Dhirubhai Ambani” - How he has been a successful businessman. A decade later the torch of the family business is shining bright in the hands of his son Mukesh Ambani. He is well known for his flair of business deals & futuristic vision. I have had a lucky encounter to shake hands with him & his son Akash at Mumbadevi temple. One thing you would observe is he is as humble as he is successful.
Today we are talking about how his skills and vision helped revive a whole telecom industry. For years we have been reading about the problems faced by the telecom industry in India. Even while paying high postpaid bills/prepaid charges half a decade ago, the network was always inconsistent.
Then comes Mukesh Ambani in 2015 comes with JIO - a company formed to solve the problem faced by many Indians and more than anything else; to help people who save internet data as it was their lifelong earnings. This enabled a majority of Indians subscribers to port their mobile network to JIO which provides fast, coherent and affordable network.
Laggard opponents of JIO started to face the heat & soon realized that their motto should have been to serve the clients & not just fill their pockets. The shift was imminent with the flow of users and market share started to shift towards JIO.
It was a wakeup call for the opponents that they need to part of this revolution or perish.
Apparently during such difficult times, when the whole nation is sitting idle at home, playing online games and streaming entertainment,. Mr. Ambani is on a roll increasing the market share of his company and finally getting closer to his aim of getting the company debt free by 2021.
The takeaways from this case study in relation to equity share market are :
1: Before investing we never study in detail about the current CEO of a company. Similarly companies like HDFC BANK under ADITYA PURI, KOTAK BANK under UDAY KOTAK, BIOCON under KIRAN MAZUMDAR have done phenomenal growth. Whereas there are countless examples of underperforming companies with good portfolio but under a visionless leadership.
Long term investors should always study the working style of the CEO. You might be investing your money, but its him/her who is running the corporate.
2: Always keep your eyes & ears open for a new company in the sector you are following. New companies come with fresh ideas trying to solve the current issues faced by consumers. The first and immediate effect will be on the companies which are lagging in innovation no matter how big or decades they have been running for.
JIO is dominating the telecom sector because it solved consumers' problem. Selling its 20% stake alone has generated more than 1 lakh crore Rs for its parent company. Surpassing the previous leader in Indian telecom sector - Airtel (Market Cap - 2.8 lakh crore Rs) and became the unsurpassable leader with a market cap of 4.9 lakh crore Rs.
A successful industry leader can reap benefits for all companies in that sector. Mr. Ambani has filled life in the telecom sector. The benefit will be enjoyed not just by himself but by his competitors as well. They have started day dreaming of the same stake sell and thinking to follow JIO footsteps if they want to remain in the industry.
In just one month there are rumors of an investment in Vodafone. How true it really is or the news is been aired by the group itself we don’t know...but it certainly has got a lot of attention and inflow in stock since as its shares have jumped from Rs 3 to approx. Rs 12.
Now the question is with all the ammo at JIO side, will other companies able to survive in the long run ?
Vodafone has a staggering debt of 1.2 trillion. Wonder how many investors he will require to keep his rally going as Supreme Court of INDIA has already asked to settle their AGR dues.
JIO is now eyeing for foreign stock exchange listing. We are very certain that JIO will be the biggest telecom service provider for a very long time now.
Please leave your views. thanks.