Facebook is investing Rs 43,574 crore for a 9.99 per cent slice in Reliance Industries led Jio Platforms – the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the Indian tech sector.
The deal with help Mukesh Ambani-owned RIL to reduce debt further and allow the Mark Zuckerberg-led company to get a stronger foothold in what is the US major’s largest market.
The synergy between Jio and Facebook is also being projected will help realise Prime Minister Narender 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.
DEAL HIGHLIGHTS
1. The deal values Jio Platforms at Rs 4.62 lakh crore ($65.95 billion) pre-money enterprise value, agreed at a conversion rate of Rs 70 to a US Dollar.
2. Facebook’s investment will translate into a 9.99 per cent equity stake in Jio Platforms on a fully diluted basis.
3. The deal is likely to give a boost to RIL’s JioMart project.
4. The deal will increase Facebook’s penetration in India.
5. The Facebook deal is a centrepiece of cutting RIL’s debt.
6. Facebook has 400-plus million WhatsApp users in India.
This is not the first time Facebook has bought a stake in a company in India. Facebook owns a minority stake in social commerce company Meesho and online education startup Unacademy.
JPL, a fully-owned subsidiary of Reliance Industries Ltd, houses many digital platforms like Jio Saavn and Radisys. As part of the deal, Facebook will get a board seat in JPL and an observer seat without voting powers. The transaction could help Facebook find new ways to monetise WhatsApp and make a dent in the enterprise business where its competitors like Amazon and Google are ahead. A stake in JPL is also likely to give it a strong toehold in the digital sweepstakes in India where it competes with the big boys like Google. Facebook India Online Services revenues were at Rs 892 crore in FY19 against Google India’s Rs 4,147 crore.
Facebook has previously partnered with a telecom provider in Japan to provide augmented reality (AR)/VRbased products using 5G networks. It also runs the ‘Telecom Infrastructure Project’, which aims to create open-source telecom equipment to promote affordable telecom infrastructure in under-connected areas.
