Social Media Conglomerate, Facebook, has enjoyed an unparalleled reach in many countries across the world, India being its largest, at 400 million users. But with China’s fast-growing ByteDance, makers of TikTok, emerging as a formidable competitor in the 2nd largest Internet market of the world, The social media titan had to find an Indian horse to bet on.
Today, Facebook announced that they are investing ₹43,574 Crore ($5.3 Billon) for a 9.99% stake of Mukesh Ambani’s Reliance Jio, one of India’s most valued Telecom carriers with more than 38.8 Crore Subscribers. This development has boosted the shares of Reliance Industries (RIL), the parent company of Jio, over 8% in early trade.
This deal will give Jio Platforms, an umbrella platform for all the Reliance-owned digital businesses, a pre-money valuation of ₹4.62 lakh Crore. Moreover, it has made Facebook the largest minority shareholder in the Indian telecom network and helped RIL reduce their debt even further.
Both companies put out separate statements, announcing this deal and subsequent collaborations on major projects in India.
On Wednesday, RIL released a statement saying,”Reliance Industries Limited, Jio Platforms Limited and Facebook, Inc. today announced the signing of binding agreements for an investment of ₹43,574 Crore by Facebook into Jio Platforms.”
Announcing the deal, Facebook stated, “This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has sparked in the country.” Additionally, they stated that one of their focus was collaborating with Jio to create “new ways for people and businesses to operated more effectively in the growing digital economy”.
Reliance has been trying to expand its digital ventures on the back of its massively successful telecom venture, Jio. Jio Platforms is the flagship that provides telecom and other e-based services to its huge subscriber base.
Reliance has repeatedly said that it wants to boost income for micro-traders, farmers and other small businesses that make up the bedrock of the economy in a country of 137 Crore people. They are expected to roll out an e-commerce initiative named JioMart, later this year. They have been conducting trials, in select mom-and-pop stores, to test payment devices.
Facebook has, historically, not made as much money from each user in Asia. Now the company hinted that the new partnership could change that. WhatsApp has worked for years to build tools for small businesses and has dabbled in payment systems, while Facebook has also invested in creating digital storefronts for entrepreneurs to sell goods and services online, Line Facebook Marketplace.
David Fischer, CRO at Facebook and Ajit Mohan, VP and MD of Facebook, India are saying that supplementing Jio’s upcoming e-commerce venture, JioMart with the “power of WhatsApp”, its messaging subsidiary, could be one such collaboration. “We can enable people to connect with businesses, shops and ultimately purchase products in a seamless mobile experience,” they added.
Reliance Jio, which began its commercial operation in the latter half of 2016, upended the local telecom market by offering a bulk of 4G data and voice calls to its users, for six months, at no charge. The telco kickstarted a price war that forced local network providers Vodafone and Airtel to revise their data plans and mobile tariffs. However, they have constantly struggled to match the offerings of Jio, which has become the top telecom operator in India.
Reliance Jio also owns a suite of services, under the umbrella company, Jio Platforms Limited. Last year, Jio had acquired Saavn, one of the leading music streaming services in India which it now plans to take public. These services also include smartphones, broadband business, on-demand live television service JioTV, and payments service JioPay.