Facebook-Reliance Jio USD 5.7 billion (Rs 43,574 crore) deal: Facebook has agreed to buy a 9.99% equity stake in Mukesh Ambani’s Reliance Jio, with an eye on a innumerous small businesses and potentially the largest digital customer base of 1.3 billion users.
Facebook-Reliance Jio USD 5.7 billion (Rs 43,574 crore) deal: In the first mega cross-border deal of the year, Mark Zuckerberg’s Facebook has agreed to buy a 9.99% equity stake in Mukesh Ambani’s Reliance Jio for Rs 43,574 crore, with an eye on the country’s 6 crore small businesses and a huge digital customer base of 1.3 billion users. The deal values the less than four-year old Reliance Jio at Rs 4.62 lakh crore, the company said in a statement. With the deal, Facebook hopes to get a foothold in the potential market of India’s countless small and medium businesses, 12 crore farmers, and 3 crore small merchants, for its social media apps Facebook, WhatsApp and Instagram, the statement said.
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 statement said. Further, the deal values Reliance Jio as one of the five largest companies in India by market capitalisation. “Our goal with this investment is to enable new opportunities for businesses of all sizes, but especially for small businesses across India and create new and exciting digital ecosystems that will empower, enrich and uplift the lives of all 1.3 billion Indians,” Reliance Jio said.
At the same time, Facebook and Reliance have also agreed to let Reliance Retail use WhatsApp as part of its ‘New Commerce’ business, riding on JioMart platform, the company said. “Jio Platforms, Reliance Retail and WhatsApp have also entered into a commercial partnership agreement to further accelerate Reliance Retail’s New Commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp,” the statement said. Reliance Retail’s JioMart is building a potential rival to e-commerce giants such as Amazon and Flipkart in India, by aggregating millions of small merchants and kirana shops to bring them digitally closer to the consumers. “The companies will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp,” the statement said.
Earlier, the Financial Times had reported that Reliance Industries and Facebook were close to signing a preliminary deal for transferring a 10% stake in the heavily indebted Jio. However, the timeline was disturbed because of the global outbreak of coronavirus. Since its inception in 2016, Mukesh Ambani’s Reliance Jio has shaken up the country’s telecom sector and it was the first company to introduce dirt cheap internet prices, forcing other companies to drastically cut their internet tariffs as well. The company has expanded from mobile telecoms into everything from home broadband to ecommerce and even gaming. India is a burgeoning market for tech companies with the country’s swelling internet user base and rising number of smartphone users. In fact, India has just overtaken the US as the second-biggest smartphone market in the world, second only to neighbour China.