Facebook makes a $5.7 bn bet on Reliance Jio to solidify India presence

Facebook has invested $5.7 billion, or Rs  43,574 crore, for a 9.99% stake in Mukesh Ambani-led Reliance Jio in a deal that is expected to strengthen the social media behemoth’s position in the rapidly growing Indian internet market.

The investment will make Facebook the largest minority shareholder in Jio Platforms, which houses all of Reliance Industries’ digital initiatives.

“This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country. In less than four years, Jio has brought more than 388 million people online, fueling the creation of innovative new enterprises and connecting people in new ways,” Facebook said in an official statement.

This investment by Facebook values Jio Platforms at $65.95 billion or Rs 4.62 lakh crore pre-money, Reliance Industries said in a separate statement.

Reliance Jio Infocomm, the telecom arm of Reliance Industries, will continue to be a wholly-owned subsidiary of Jio Platforms.

According to Reliance, the deal marks 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.

After disrupting the telecom industry by offering competitively priced high-speed internet access since 2016, Reliance Jio forayed into the broadband and home entertainment space with JioFiber. 

The company also took on Amazon and Flipkart, by venturing into India’s booming ecommerce market with a soft launch of JioMart late last year.

The deal will power JioMart as Facebook-owned messaging app WhatsApp will be leveraged to support JioMart’s small businesses. “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.

India is the largest market for Facebook with 328 million monthly users while its messaging app WhatsApp connects over 400 million users in the country.  According to various media reports, WhatsApp is all set to roll out its mobile payments service in India.

India is also the second-largest market for Facebook’s photo-sharing social media app Instagram with 80 million active users.

Facebook has been making equity bets on Indian startups to connect with India’s digital user base outside its core offering. It has made undisclosed investments in social commerce platform Meesho and online tutoring platform Unacademy.  

The deal will help Reliance reduce its debt further, which according to a Reuters report, had reached more than $40 billion as of September. The company had undertaken an organisational rejig last year to make its digital business entity debt-free to attract strategic and financial investors. According to various media reports, Reliance is in talks with Saudi Aramco to sell a fifth of its oil and chemical refining business for roughly $15 billion. It is also set to sell a stake in its telecom tower assets to Canadian private equity firm Brookfield Asset Management for over $3 billion.

Facebook’s investment in Reliance Jio comes at a time when the Indian parliament is scheduled to take up the Personal Data Protection Bill for discussion in the second week of the monsoon session. The bill deals with several key issues, including exemptions granted to government departments for demanding non-personal data from companies.

Facebook’s Internet.Org initiative, which was aimed to bring five billion people online, had come under severe criticism in India for its stance against the concept of Net Neutrality. Facebook had partnered with Reliance Communications to provide free Internet access to 33 websites as part of its Internet.Org initiative. 

However, the programme was opposed by free Internet activists who said that it violates the idea of Net Neutrality. 

Net neutrality states that equal treatment be given to all internet traffic. The principle prohibits prioritising entity or company based on payment to service providers like telecom companies. 

Although the social media giant later renamed "internet.org" as Free Basics by Facebook, telecom regulatory authority of India (TRAI) banned the programme on the grounds that it infringed the principles of net neutrality.