Facebook has enjoyed unparalleled reach in India for more than a decade. But as China’s fast-growing ByteDance emerges as a formidable competitor in what has become the world’s second largest internet market, the American giant has found the horse it wants to bet on in the new decade.
Facebook announced today it has invested $5.7 billion for a 9.99% stake in India’s Reliance Jio telecom operator with more than 370 million subscribers. The deal valued Jio at a pre-money valuation of $65.95 billion.
As per terms of the agreement, the American firm will become the largest minority shareholder in Jio, a three-and-a-half-year-old subsidiary of India’s most valued firm, Reliance Industries.
The social giant said it will focus on collaborating with Jio to create “new ways for people and businesses to operate more effectively in the growing digital economy.” This is the largest investment for a minority stake by a technology company anywhere in the world and the largest foreign direct investment in the technology space in India.
David Fischer, Chief Revenue Officer, and Ajit Mohan, VP and Managing Director, India said one example of such collaboration could be 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,” they said.
Reliance Jio, which began its commercial operation in the second half of 2016, upended the local telecom market by offering bulk of 4G data and free voice calls for six months. The telco kickstarted a price war that forced local network providers Vodafone and Airtel to revise their data plans and mobile tariffs. But they struggled to match the offerings of Jio, which has become the top telecom operator in the country.
Reaching Jio’s users might interest Facebook, which attempted and failed to expand its free internet initiative, Free Basics, in India. (The company has since expanded Express Wi-Fi to India — though its potential and scale remains comparatively small.)
Reliance Jio also owns a suite of services including music streaming service JioSaavn, which it plans to take public, smartphones, broadband business, on-demand live television service JioTV and payments service JioPay.
“We’re making a financial investment, and more than that, we’re committing to work together on some major projects that will open up commerce opportunities for people across India,” said Mark Zuckerberg, co-founder and chief executive of Facebook, in a post.
In recent quarters, Facebook has started to take interest in local startups. Last year, the firm made an investment in social commerce Meesho; and earlier this year, it wrote a check to edtech startup Unacademy.
Mohan told TechCrunch in an interview last year that the company was open to engaging with startups that are building solutions for the Indian market for more investing opportunities. “Wherever we believe there is opportunity beyond the work we do today, we are open to exploring further investment deals,” he said.
But for Facebook, there might be one more perk in this deal: Mukesh Ambani. India’s richest man is a close ally of Indian Prime Minister Narendra Modi, and his firm has consistently supported policy proposals from the ruling government. And Facebook has received more scrutiny than ever in India in recent years, under Modi’s government.
In a statement, Ambani said, “when Reliance launched Jio in 2016, we were driven by the dream of INDIA’S DIGITAL SARVODAYA — India’s Inclusive Digital Rise to improve the quality of life of every single Indian and to propel India as the world’s leading Digital Society. All of us at Reliance are therefore humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India for the benefit of all Indians.”
“The synergy between Jio and Facebook will help realise Prime Minister Shri Narendra Modi’s ‘Digital India’ Mission with its two ambitious goals — ‘Ease of Living’ and ‘Ease of Doing Business’ – for every single category of Indian people without exception. In the post-Corona era, I am confident of India’s economic recovery and resurgence in the shortest period of time. The partnership willsurely make an important contribution to this transformation,” he added.
More to follow…