Facebook invests $5.7 billion in India’s largest telecom operator Reliance Jio

Image: REUTERS/Shailesh Andrade
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At a time when most Indian telecom firms are reeling under massive losses, Reliance Jio, owned by India’s richest man, Mukesh Ambani, has announced a deal that could further entrench its position as the market leader.

US-based social networking giant Facebook has bought a 9.99% stake in Jio Platforms for Rs43,574 crore ($5.7 billion), the two companies said in separate statements today (April 22).

Jio Platforms is a wholly-owned subsidiary of Reliance Industries (RIL) and the umbrella entity for all of Ambani’s digital and internet businesses, including mobile apps, broadband connectivity, smart devices, cloud computing, big data analytics, artificial intelligence, internet of things, augmented and mixed reality, and blockchain.

“This investment by Facebook values Jio Platforms (at) Rs4.62 lakh crore pre-money enterprise value ($65.95 billion, assuming a conversion rate of Rs70 to a US dollar),” RIL said in a statement. “This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India. The investment values Jio Platforms amongst the top five listed companies in India by market capitalisation, within just three and a half years of launch of commercial services.”

Launched in September 2016, Jio currently has over 388 million users, Facebook said in a statement. “One focus of our collaboration with Jio will be creating new ways for people and businesses to operate more effectively in the growing digital economy,” the Mark Zuckerberg-led company said. “For instance, by bringing together JioMart, Jio’s small business initiative, with the power of WhatsApp, we can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience.”

The investment reaffirms Facebook’s interest in India, a key market for several of its businesses. As of July 2017, India was home to 241 million active Facebook users, higher than any other country.

The company’s instant messenger, WhatsApp, is also a rage in India with over 400 million monthly active users, making it the company’s biggest market. With 80 million users, India is second only to the US in terms of the number of users for Facebook’s photo-sharing app, Instagram.

“We are excited about furthering our investment in India’s vibrant digital economy,” the company statement said. “Our efforts with Jio will be focused on opening new doors and fueling India’s economic growth and the prosperity of its people. We look forward to working with Jio, and to future collaborations in India to advance this vision.”

For Jio, the deal could bring a much-needed fund infusion, which may help reduce RIL’s debt burden.