Should you buy Reliance shares as Jio announces a deal with Elon Musk’s SpaceX?

Telecom player Jio Platforms, owned by conglomerate Reliance Industries, announced on March 12 that it will bring Elon Musk’s satellite-based internet service Starlink to India, a day after rival Bharti Airtel made a similar announcement.

The collaboration between Jio and Elon Musk's SpaceX aims to provide reliable internet services across the country, including in India's most rural and remote regions.

According to an exchange filing by Reliance Industries, Jio will offer Starlink solutions through its retail outlets and online storefronts. Jio will also establish a mechanism to support customer service installation and activation.

This agreement is subject to SpaceX receiving its own authorisations to sell Starlink in India.

“We are looking forward to working with Jio and receiving authorization from the Government of India to provide more people, organisations and businesses with access to Starlink’s high-speed internet services,” said Gwynne Shotwell, President and Chief Operating Officer of SpaceX.

Reliance's share price gained over a per cent in intraday trade on the BSE on Wednesday, March 12. The stock opened at ₹1,256.85 against its previous close of ₹1,247.40 and climbed over a per cent to the level of ₹1,261.55. 

Meanwhile, Bharti Airtel on March 11 announced that it had signed an agreement with SpaceX to bring high-speed satellite internet service Starlink to India.

Should you buy Reliance shares?

The announcement of the collaboration between Jio and SpaceX is a positive development for the company.

Prashanth Tapse, senior VP of research at Mehta Equities, sees the collaboration as positive for Jio and expects the company to acquire more consumers. 

"Jio stands to benefit from this collaboration, as the company faces connectivity challenges in remote areas like villages and forests. With Elon Musk’s satellite-based internet service, Starlink, Reliance can expand its reach and provide faster, more reliable internet access to customers in these underserved regions," said Tapse.

According to Vishnu Kant Upadhyay, AVP of research and advisory at Master Capital Services, the partnership between Reliance Jio and Starlink represents a pivotal move toward enhancing digital connectivity in India and will potentially pay off in the long term.

"Reliance Industries presents a better earnings momentum going ahead, and the potential listing of the Jio telecom unit is also a major positive factor in supporting the company," said Upadhyay.

However, these collaborations should also be seen in different contexts. With both Bharti Airtel and Reliance Industries making similar announcements, it is clear that the deal is not exclusive to any company. So, no single company will likely gain over another due to this. 

Avinash Gorakshakar, Head of Research at Profitmart Securities Pvt. Ltd., pointed out that two top telecom companies have made similar announcements regarding collaboration with SpaceX.

This means it is not an exclusive deal with any one company. As a result, the collaboration will be more beneficial for consumers and SpaceX, which will gain access to a large market, rather than for Reliance Industries.

"The collaboration is more positive for Elon Musk's SpaceX than for Reliance Industries as it is not an exclusive deal," said Gorakshakar.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.