Jio Financial Services (JFS) is seeking shareholder approval for its unit to acquire equipment worth Rs 36,000 crore from the retail arm of Reliance Industries (RIL) as the financial services provider plans to enter the device leasing business, according to a postal ballot notice from the company.
Under the proposed deal, the JFS unit called Jio Leasing Services will buy telecom equipment and devices that usually include routers and cell phones. The JFS subsidiary will rent out the equipment it buys to customers of Reliance Jio Infocomm – Reliance’s telecommunications arm – the financial services company said.
“JLSL is entering into the business of operating lease via a Device-as-a-service (“DaaS”) model. DaaS is a new-age service model where businesses or individuals lease certain goods along with associated services, rather than purchasing the devices outright. DaaS typically includes installation, maintenance, support, and sometimes additional services like updates.
RRL is in the business of dealing with devices and related equipment. JLSL will purchase customer premises equipment/devices and telecom equipment from RRL, which will be provided by JLSL on operating lease to the customers of Reliance Jio Infocomm Limited,” according to the postal ballot document.
The monetary value of the transactions is estimated to be Rs 36,000 crore to be undertaken over FY2024-25 and FY2025-26. The split of purchases across the two years would depend on the uptake of services and the pace of deployment of broadband wireless devices, the company said.
“Assuming the total monetary value of Rs. 36,000 crore is split equally in FY2024-25 and FY2025-26 it represents: i. 970.94% of annual consolidated turnover of the Company for FY2023-24; and ii. JLSL did not have revenue from operations during FY2023-24. Accordingly, the percentage of its annual turnover is not applicable,” the document said.
Jio Financial, spun out of billionaire Reliance Group last year, had said in its earnings investor presentation that it will lease Jio Infocomm’s AirFiber wifi services, phones, and laptops among other products.
The company will compete in the device-rental market with the likes of Hewlett-Packard and Lenovo.
Voting on proposed items in the notice ends on June 22.
Jio Financial Services Ltd’s consolidated net profit rose by 5.8 percent year-on-year (YoY) to Rs 311 crore in the quarter ended March 2024 (Q4FY24), up from Rs 294 crore in the same quarter of FY23.
The total income of the entity, which is a holding company for businesses, including lending, insurance broking, asset management etc., rose to Rs 418 crore in Q4FY24 from Rs 414 crore in Q4FY23. This was the first annual results of the company as a listed entity.