Jio Financial Plans Major Device Leasing Deal with Reliance Retail

Jio Financial Services (JFS) is pursuing shareholder approval for its subsidiary to acquire equipment worth Rs 36,000 crore from Reliance Industries' (RIL) retail division, aiming to enter the device leasing sector, according to a postal ballot notice.

The proposed transaction involves JFS's unit, Jio Leasing Services, purchasing telecom equipment and devices, including routers and cell phones. These devices will be leased to customers of Reliance Jio Infocomm, Reliance's telecommunications branch, as stated by JFS.

"Jio Leasing Services Limited (JLSL) is venturing into operating leases through a Device-as-a-Service (DaaS) model. DaaS is a modern service model where businesses or individuals lease goods with associated services, rather than purchasing them. It typically includes installation, maintenance, support, and additional services like updates. Reliance Retail Limited (RRL) deals with devices and related equipment, which JLSL will buy and lease to Reliance Jio Infocomm Limited customers," the notice explains.

The deal's value is estimated at Rs 36,000 crore over FY2024-25 and FY2025-26. The purchase distribution will depend on service uptake and the deployment pace of broadband wireless devices.

"Assuming the total deal value of Rs 36,000 crore is split equally between FY2024-25 and FY2025-26, it represents: i. 970.94% of the Company’s annual consolidated turnover for FY2023-24; and ii. JLSL did not generate revenue from operations during FY2023-24, making the percentage of annual turnover inapplicable," the notice states.

Spun out of Reliance Group last year, Jio Financial mentioned in its earnings presentation plans to lease Jio Infocomm’s AirFiber wifi services, phones, and laptops, among other products. 

The company will compete with Hewlett-Packard and Lenovo in the device-rental market. Voting on the proposal ends on June 22.

Jio Financial Services Ltd’s consolidated net profit increased by 5.8% year-on-year (YoY) to Rs 311 crore in Q4FY24, up from Rs 294 crore in the same quarter of FY23. The total income rose to Rs 418 crore in Q4FY24 from Rs 414 crore in Q4FY23. This marks the company's first annual results as a listed entity.