Saudi Aramco Set to Buy Stake in Reliance Oil, Alibaba Might Want Zomato to be Closer to Paytm, Huawei Updates

Saudi Aramco set to acquire 20% stake in Reliance’s oil business at an enterprise value of $75bn. RIL announces launch date of Jio Giga Fiber. Anil Agarwal’s Volcan Investments expresses interest in Jet Airways. SoftBank in talks to acquire stake in Bharti Airtel’s telecom business and other assets. Tata Steel trims capital outlay on back of global economic slowdown. Six months after its launch in India, how is Spotify faring? As Zomato plans new funding round, its flexibility could be highly curtailed by Alibaba’s Ant Financial. Airtel, Vodafone Idea and Jio likely to leave Huawei from core 5G contracts. China warns of “reverse sanctions” against India if Huawei is blocked.

 

Moving on to the top Business news stories today:

 

 RIL 

Saudi Aramco set to acquire 20% stake in Reliance’s oil business at an enterprise value of $75bn. RIL announces launch date of Jio Giga Fiber.


 
The What: In one of the biggest foreign investments in the history of Reliance Industries, oil giant Saudi Aramco is set to acquire 20% stake in its oil refinery and chemical business at an enterprise value of $75bn.


 
As part of the deal, Saudi Aramco will supply 500,000 barrels per day to Reliance’s twin refineries at Jamnagar in Gujarat. 


 
Saudi Aramco will take 20% stake in a proposed special vehciles housing the twin refineries as well as the firm’s petrochemical complex.


 
The announcement was made by Mukesh Ambani at Reliance Industries' 42th annual general meeting. 


 
More to Come: Ambani also announced the launch date of Jio Giga Fiber, Jio set top box and First Day First in a major push to make Reliance Jio India's largest network.

 

 DEALS 

Anil Agarwal’s Volcan Investments expresses interest in Jet Airways. SoftBank in talks to acquire stake in Bharti Airtel’s telecom business and other assets.


 
Light At the End of the Tunnel: Vedanta Limited Chairman and mining and metal baron Anil Agarwal’s family trust Volcan Investments has submitted an Express of Interest (EoI) to revive grounded Jet Airways



Jet Airways has received only three EoIs, including Panama-based Avantulo Group. These will be examined by a resolution professional to verify their eligibility.


 
The final bids are to be submitted by September 12.


 
In Other News: Japanese investment giant SoftBank is in preliminary talks with telecom major Bharti Airtel to acquire a stake in its telecom business and related assets, either directly or indirectly through a holding company.

 

 MARKET ECONOMY 

Tata Steel trims capital outlay on back of global economic slowdown.


 
Tough Times Ahead: Tata Steel is looking at an over 33% reduction in capital outlay across Indian and European operations, on back of a global economic slowdown and reduced cash flows. 


 
As per this report, the capital expenditure, which was estimated at INR12,000cr for this fiscal, will be reduced to INR8,000cr.


 
Zooming Out: Tata Steel has reported a 64% fall in its consolidated June quarter net profit at INR702cr vs INR1,934cr last year due to a sharp fall in realisation and higher raw material cost.


 
In a rather rare occurrence, the FPI index long-short ratio (a measure of investors’ expectation of the market) dropped to 0.48 in the August series.


 
Historically, a low reading signifies support for the market and an imminent upward move. Subsequently, the low reading (below 0.48) of the FPI index long-short ratio may result in an average upward move of 5.9% for the Nifty by the end of the monthly derivatives expiry. 


 
More on this here.

 

 STARTUPS 

Six months after its launch in India, how is Spotify faring? As Zomato plans new funding round, its flexibility could be highly curtailed by Alibaba’s Ant Financial.


 
Now Streaming for Six Months: Six months after it launched in India, Spotify claims it is among the country’s “top three players”. In a recent interview, Spotify India’s MD said the streaming service racked up one million users within its first week of launch and over two million in the first month. (It has, however, been silent on overall India numbers.)


 
100 million of the 217 million Spotify users pay for music, but in the Indian market, fewer than 1% of the 150 million+ listeners (across apps) pay for content. This, in addition to the heavily congested audio streaming market, are the challenges faced by Spotify and its competitors in the country.


 
Alibaba and the Forty Veto Rights: Ant Financial, the financial affiliate of Chinese internet behemoth Alibaba, is a key stakeholder in Zomato. And it will likely exercise its veto rights as Zomato plans to raise c. $500mn in a new funding round – as it did in October last year. This could include Ant Financial vetoing investors viewed as its competitors and forging closer ties between Zomato and Paytm, another company Alibaba has invested in. More here

 

 5G 

Airtel, Vodafone Idea and Jio likely to leave Huawei from core 5G contracts. China warns of “reverse sanctions” against India if Huawei is blocked.


 
Better Safe Than Sorry: India’s telecom giants (Airtel, Vodafone Idea and Reliance Jio) will reportedly not use Huawei equipment in “core” elements of 5G infrastructure to not risk any future ban on the embattled Chinese manufacturer. Huawei equipment might still be used in “non-core” parts of the 5G networks.


 
Blackmails, Espionage & Sanctions: US Congressman Jim Banks accused China of “blackmailing” India into using Huawei for 5G infrastructure. The Communist Party strong-arms countries into exposing themselves to surveillance and espionage, the lawmaker said. Banks was quoting a Reuters article reporting that China had warned India of “reverse sanctions” if Huawei was blocked from doing business in the country.