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A few months after Reliance Jio Infocomm Ltd announced details of its fixed-line broadband service, JioGigaFiber, it decided to buy majority stakes in Den Networks Ltd, and Hathway Cable and Datacom Ltd. The two firms were expected to help improve last mile connectivity for JioGigaFiber.

But the over $1 billion investment in acquiring Den and Hathway are yet to bear meaningful results, said analysts. “Jio’s own cut-throat pricing has in fact impacted these firms, while there are no concrete signs of riding on their last mile connectivity for better reach," said an analyst at a domestic institutional brokerage, requesting anonymity.

In this backdrop, the moot question is whether Reliance Retail Ventures Ltd’s (RRVL’s) acquisition of a controlling stake in Just Dial Ltd (JD) will fare better. Reliance Industries owns an 85% stake in Reliance Retail. Of course, when it offloaded slightly more than a 10% stake in the firm last year, it had raised as much as 47,265 crore. So, the 3,500 crore it is spending to acquire a 41% stake in Just Dial isn’t very large compared to the cash available with the group.

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“The key attraction for Reliance Retail would be access to Just Dial’s database of merchant listings/retailers and the potential to scale up the JD app and JD Mart Platforms and add on to Jio Mart app and expand the scope of services and offerings across B2B and B2C," analysts from J.P. Morgan India Pvt. Ltd said in a report on 18 July.

Just Dial has recently launched its B2B marketplace (JD Mart). “We will wait to see how the acquisition would expand JioMart’s footprint and if JD Mart is eventually integrated with the JioMart app, thereby putting in place the building blocks of a ‘Super App’," JP Morgan’s analysts added.

Tapping the potential among SME businesses appears to be the key rationale for the deal. “The investment in Just Dial underlines our commitment to new commerce by further boosting the digital ecosystem for millions of our partner merchants, and micro, small and medium enterprises," the company said in a press release.

RRVL is infusing 2,167 crore in the firm, and analysts said this can enhance its B2B offerings. “With fresh capital and strong cash balances, JD can now afford to delay its monetisation plans, disrupt the competition (such as IndiaMART) in pricing and play a significant catch up in B2B," said analysts at ICICI Securities Ltd.

And, while Hathway and Den witnessed a form of cannibalization, analysts at ICICI said JD’s services are complementary, rather than competing.

Whether the services are competing or complementary, what really matters is that the integration of the two firms’ services happens smoothly and significant synergies are extracted. Else, the JD acquisition will be another instance of a merger and acquisition (M&A) that holds much promise, but delivers little.

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