Ambani Vs Tata: India’s Tencent Vs India’s Alibaba

The fight for control of 1.3 billion Indians’ data is likely to become a two-horse race. This is similar to the Chinese pair of Pony Ma and Jack Ma who have acquired major amounts of their country’s internet businesses. If Tata Sons Pvt. comes up with strategic or financial investors, the battle would get under way.

Of late, Mukesh Ambani has raised $20 billion from the likes of Alphabet Inc., Facebook Inc., Silver Lake Partners among others. Taking a cue from Ambani, the sister firm of the $113 billion coffee-to-cars conglomerate may be going the same path for its digital assets. India’s richest conglomerate, Ambani, is now parcelling out stakes in his retail venture, and may have sought out Inc. 

For a $25 billion investment in a super-app, the 152-year-old Tata Group is in talks with Walmart Inc. The app will be a multipurpose online platform combining lifestyle, fashion, electronics retail, food and grocery, insurance and financial services, as well as digital content and education.

With almost 400 million frequent subscribers for his 4G telecommunications network, the upper hand is with Ambani. India’s largest retail chain is owned by him. In China and Southeast Asia, the kind of super app that has succeeded requires a reason for customers to visit it frequently.  

Talking about Jack Ma’s Alibaba Group Holding Ltd, it has its well-known Alipay wallet. When it comes to Pony Ma’s Tencent Holdings Ltd, it has a messaging service WeChat, and WeChat Pay.

Tata has reach across 100 businesses

When it comes to Southeast Asia, Grab has carved a stable customer base as riding-hailing platform before going into financial services. Ratan Tata can aim to unveil its Alibaba if Ambani is aiming to become India’s Tencent. Tata Sons owns Jaguar Land Rover car brands. By means of their supply chains, it has its tentacles in over 100 businesses.

If Tata is able to offer a portal to its merchants to sell their wares, discount bills and host data then expansion into business-to-consumer or consumer-to-consumer websites — like Alibaba’s Tmall or Taobao — won’t be that tough. Apart from this, if Walmart joins hand, Tata may get reach to both the US retailer’s India e-commerce website PhonePe and Flipkart. It bought Flipkart for $16 billion.

In running consumer businesses Tata has a stronger pedigree than Ambani. However, some of its ventures like the world’s cheapest car – Nano—have tanked. Apart from this, the group also misjudged the challenge from Ambani’s Jio 4G network. Due to this, it was compelled to offload its mobile service business.

Apart from this, Tata is a 51% partner in a low-cost domestic airline. However, as per India’s aviation minister, the unit is about to close. Ratan Tata may be compelled to buy out Air Asia Group Bhd. It is owned by Malaysian entrepreneur Tony Fernandes’s., the 49% partner.

If Tata acquires taxpayer-supported Air India Ltd., Aviation will need further investment. Indian Government is desperate to sell Air India. Before Air India was nationalized, the Tata Group was the carrier’s original owner.

Refining and petrochemicals struggle with global oversupply

To cut his flagship Reliance Industries Ltd’s net debt to zero and decrease its reliability on refining and petrochemicals, Ambani brought in outside equity. In the post-Covid demand, these are the businesses that will struggle with global oversupply. In steel and automotive businesses, Tata has a net debt overhang of more than $20 billion.

Apart from this, to buy out the Shapoorji Pallonji Group, Ratan Tata need billions of dollars. It is an 18.4% shareholder in the holding company. Four years ago, SP Group scion Cyrus Mistry was ousted as Tata Sons Chairman. Since then, the two sides have been stuck in a chaotic legal feud.

SP’s liquidity crisis is compelling it to cash out. Tata has to exercise its right of first refusal or bring in other investors. The firm will look to do it by tapping the group’s deep connections with Singapore’s sovereign wealth fund and its state investment firm. 

The Tata Group has so far kept itself together by the glue of its software export business. Without much need of investment, the business churns out cash. Nevertheless, clients have started moving to cloud-hosted services. To help international firms maintain large applications on in-house servers is getting stale.

Moreover, for arbitraging the labor of cheap Indian code-writers, stricter US visa limitations will shrink the possibility. The Tata Group is in need of a new growth engine, and is likely to find one in data. However, there is a need to hurry up. For Jio, Alphabet’s Google is looking to design a cheap Android phone. Payments for JioMart could be handled by Facebook’s Whatsapp messaging. JiioMart is a network of neighborhood shops virtually associated with Jio subscribers.

If Walmart supports Tata and Amazon backs Ambani then corporate America would have largely finished placing its bets on the likely next big emerging-market online commerce story after China.  

Certainly, India has possibility for two super-apps. It is backed by the point that a large portion of users will be accessing data on $50 smartphones with limited storage. This is a good enough reason for Tata to make its moves quickly.

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