Facebook to invest Rs 43,574 crore in Reliance Jio for 9.9% stake.
Yes, it’s official now. Mark Zukerberg in his tweet confirmed that Facebook is to buy a 9.99% equity stake in Mukesh Ambani’s Reliance Jio, with an eye on ever-growing small businesses and potentially the largest digital customer base of 1.3 billion. This new collaboration is to further bring us close to our dream of becoming the world’s number one manufacturing hub as both the giants are determined to empower the Kiranas and small business in the country.
Facebook-Reliance Jio USD 5.7 billion (INR 43,574 crore) deal: In this striking deal, Facebook has agreed to buy a 9.99% equity stake in Reliance Jio for INR 43,574 crore(USD 5.7 billion), with an eye on India’s 6+ crore small businesses and a huge digital customer base of 1.3 billion users. The deal valued Muskeh’s Reliance Jio at INR 4.62 lakh crore. With this new deal, Facebook aims to get a stronghold in the potential market of India’s evergrowing small and medium businesses, 120 million farmers, and 30 million small merchants, for its social media apps Facebook, WhatsApp and Instagram, the statement said.
This is the giant size investment for a minority stake by a technology company anywhere in the world and so far the largest FDI in the technology sector in India, they said. The new investment values Mukesh Ambani’s Jio as one of the five biggest companies in India by market capitalisation. The reliance Jio further added that with this investment they will enable new opportunities for businesses of all sizes, exclusively for small businesses across India and create new and strong digital ecosystems that will support and empower the lives of all 1.3 billion Indians.
Further, 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 provisional stores to bring them digitally closer to the consumers. “The companies will work closely to ensure that consumers are able to access the nearest provisional stores who can deliver products and services to their homes by transacting seamlessly with JioMart using WhatsApp. From day one of its inception, Mukesh’s Jio has disrupted the country’s telecom sector by offering very affordable internet prices, forcing other companies to drastically cut their internet rates. The company has expanded from mobile telecoms into everything from home broadband to e-commerce and even gaming. India is a hot cake for tech companies with the country’s rocketing internet user base and magnifying 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.
This deal with the global technology giant Facebook comes as a big uplift to Mukesh Ambani at a very bad phase when Reliance group is battling the bad impact of the COVID-19 pandemic and a slump in demand for crude oil, with this new fund Reliance should be aiming to reduce the group’s net debt to zero and increase the market share in next one year time.
By Chaitanya Gundluri
About The Author
By Chaitanya Gundluri
Chaitanya Gundluri is a Serial Entrepreneur, Business Investor, Interviewer, Passionate Marketer, Business Blogger and an Influential Sales Leader.
As I read about the purchase of share in Jio by Facebook early in the morning I just thought this is just a one more merge to further expand their roots in the country. But after reading this I got to know that both billionaires joined hands to keep India as a much stronger digitalized country. Altough their are plenty of door step services in India, string leadership and attractive discounts from Jio Mart makes the life’s simple. Surely looking forward for the development of this duo.
Hoping to see a new Indian Alibaba with this deal.
In my personal opinion, Both Facebook & Jio haven’t been able to make ground breaking impact in India’s digital market, if we go with the earlier speculations as below:
1. WhatsApp couldn’t make an impact with Whatsapp payment. Google pay, Paytm, phonepe are still leading players so far.
2. Jio TV couldn’t make an impact in OTT, as compared to Netflix, Amazon prime, hotstar in T1, T2 cities even other OTT players like AltBalaji, MXPlayer have also made their presence felt in this category.
3. Ajio couldn’t make an impact in e-commerce comparatively to Flipkart, Amazon, Myntra even Snapdeal has shown far better results, which once was at the backfoot.
4. Jio as an Telco service hasn’t been able to impact Airtel, which still is competent to the offerings of Jio ecosystem. Xstream, Wynk Music, Airtel plans are also doing better.
Honestly, What’s more surprising is that Facebook has valued Jio platforms at staggering 4.6 lac crore. That’s a humongous figure, yet not justified looking at the stakes of Jio products in any of the domain they deal into.