Facebook is spending 5.7 billion dollars or Rs 43,574 crore in Indian terms, for a 9.9% stake in India’s largest mobile operator, Reliance Jio, and teaming up with the Chief Managing Director, and Asia’s second richest man, Mukesh. D. Ambani. Jio Platforms is the digital technology arm of Indian billionaire Mukesh Ambani’s sprawling conglomerate Reliance Industries.
Jio Platforms has many services under its umbrella, which includes Reliance Jio, the mobile network that has taken India by storm since launching less than four years ago, racking up almost 400 million users, which caused other local operators to merge in order to stay competitive in the telecom industry. Jio also has a slew of apps where users can stream movies, shop online and read news which also fall under Jio Platforms. The tie-up includes a commercial partnership with WhatsApp that hopefully paves the way for Facebook to make money from the messaging service’s 340 million users in India.
“This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country,” Facebook said in a blog post on Tuesday.
The investment gives Facebook a 9.99% stake in Jio Platforms and gives it a pre-money enterprise value of $65.95 billion.
A winning combination
India is a key market for WhatsApp’s messaging service, which is used by Facebook, and has over 400 million users in the country.
Facebook said it will work with Jio to create “new ways for people and businesses to operate more effectively in the growing digital economy.”
Room for Growth
India is in the midst of a large internet boom. It’s the world’s second largest smartphone market, and has hundreds of millions of users using the internet day in and day out for buying online, streaming music and videos, and doing various businesses with people from across the globe. There is plenty more room for growth as around 600 million people are yet to have internet access.
The investment in Jio is one of the biggest investments Facebook has made, according to Bernstein, and could help the Silicon Valley firm experiment with something akin to WeChat, the popular messaging app in China that is used for everything from booking doctor’s appointments to making digital payments.
According to a company spokesperson, the name Jio was chosen because it is the mirror image of “oiL” — refining crude is the main business of Reliance Industries.
But Jio also means “to live” in Hindi, and Ambani has certainly pushed hundreds of millions of Indians to live increasingly digital lives. Ambani has become something of a gatekeeper of the country’s internet.