New Delhi: Facebook on Wednesday announced an investment of USD 5.7 billion (Rs 43,574 crore) to buy a 10 per cent stake in the firm that houses billionaire Mukesh Ambani's telecom arm Jio as the social media giant looks to expand presence in its largest market in terms of subscriber base.
"Today, we are announcing a USD 5.7 billion, or Rs 43,574 crore, investment in Jio Platforms Limited, part of Reliance Industries Limited, making Facebook its largest minority shareholder," the company said in a statement.
Facebook's investment will translate to a 9.99% equity stake in Jio Platforms on a fully diluted basis, Jio said in a statement.
The deal comes at a time when Facebook-owned WhatsApp has secured approval to roll out its digital payment service in India, according to media reports, to compete with the likes of Google Pay and Paytm.
Jio Mart
RIL said that concurrent with the investment, Jio Platforms, Reliance Retail Ltd and WhatsApp have also entered into a commercial partnership agreement. This is to further accelerate Reliance Retail's new commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp.
JioMart provides consumer access to the nearest small merchant and kirana shops.
WhatsApp has 400 million users in India, its biggest market, reaching nearly 80% of smartphone users in the country.
Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd (RIL), houses digital services of the group. Reliance Jio Infocomm Ltd, with 388 million subscribers, is a wholly-owned subsidiary of Jio Platforms.
The Facebook deal is part of value unlocking by RIL to cut debt. RIL has been seeking strategic partnerships across its businesses while targeting to deleverage its balance sheet.
It has been talking to Saudi Aramco for sale of a 20 per cent stake in its oil-to-chemical business for an asking of USD 15 billion. RIL has already tied up with BP Plc for fuel business as it targets to have a debt-free status by next year.
Win-win
Jio had also been reportedly talking separately to Google but the fate of those discussions is not known.
The latest deal is a win-win for both Facebook and Jio. It would give Facebook deeper access to India, the second largest internet market after China.
Facebook already has 400-plus million WhatsApp users in India and is looking to launch a payment offering. Having a local partner could help it in navigating various regulatory issues, including those related to privacy and local storage.
Also, having a good telecom partner could help Facebook improve its reach to masses.
From an RIL perspective, it could leverage on Facebook's technology expertise and talent pool as well as help in its ambitions to make Jio a digital company. This apart, the deal would aid the company achieving zero debt status by March 2021.
Together with WhatsApp and Instagram, Facebook overall is estimated to have more users in India than any other single country.
The number of internet users in India is projected to rise to about 850 million in 2022, according to consultancy PwC, up from 450 million in 2017.
The transaction, RIL said, is subject to regulatory and other customary approvals.
(With inputs from PTI and Reuters)
