Sunday, March 7, 2021

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Mark Zuckerberg Explains Why Facebook Invested $6 Billion In Mukesh Ambani’s Jio

Reliance Industries Limited (RIL) disclosed that Mark Zuckerberg’s social media giant Facebook bought a 9.99% stake for $5.7 billion in its subsidiary Jio Platforms on Wednesday.

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The deal is the biggest investment for a minority tech stake anywhere in the world and the biggest foreign direct investment in the Indian technology sector. This makes Zuckerberg’s Facebook, Jio’s biggest minority shareholder.

With the investment, the RIL technology arm Jio is now valued at Rs 4.62 lakh crore ($66 billion) pre-money enterprise value and is placed amongst the top five listed companies in India by market capitalization, within just three and a half years of its launch, Reliance Industries said in a release.

It has also provided Mark Zuckerberg’s social media giant – Facebook to establish a strong presence in India that is fast-emerging as a huge digital market while allowing Reliance Jio to significantly reduce its burgeoning debt caused by rapid expansion.

RIL said the goal of this investment was to enable new opportunities for businesses of all sizes, especially for small businesses across the country.

Mukesh Ambani, Chairman, and Managing Director, Reliance Industries, commenting on the partnership with Facebook said, “All of us at Reliance are 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.

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The synergy between Jio and Facebook will help realize PM 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.”

Many media houses quoting Mark Zuckerberg’s Facebook saying, “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. We are committed to connecting more people in India together with Jio.”

Facebook further said, “Our goal is to enable new opportunities for businesses of all sizes, but especially for the more than 60 million small businesses across India.”

Indians are among the largest online community on Facebook and WhatsApp. “With communities around the world in lockdown, many of these entrepreneurs need digital tools they can rely on to find and communicate with customers and grow their businesses. This is something we can help with — and that’s why we’re partnering with Jio to help people and businesses in India create new opportunities,” Mark Zuckerberg said.

Ajit Mohan VP and Managing Director of Facebook India and David Fischer, Chief Revenue Officer at Facebook saying that the deal between Facebook and Reliance Jio will bring together JioMart an e-commerce business that is a joint venture between Jio and Reliance Retail with WhatsApp which has around 400 million consumers.

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There is another added incentive for Facebook in the deal which has come under increasing scrutiny from the Indian Government headed Prime Minister Narendra Modi who is believed to have close ties with RIL Chairman Mukesh Ambani.

Since its launch in 2016, almost four years back Reliance telecommunication arm Jio added more than 340 million customers through a diverse range of product offerings. RIL has also attempted to cut down its debt burden by offering to sell its stakes in some of its businesses.

It is believed to be in talks with Saudi Arabia’s Aramco to sell its 20 percent stake to Canada’s Brookfield Asset Management for a stake in its telecom tower business.

WhatsApp, Facebook’s chat service is slated to launch payments service as a counter to increasing competition from Paytm, Google Pay, Phone Pay, and Amazon Pay. The deal will also enable Facebook to counter the rapid popularity of China’s TikTok app that has increased its base to 250 million users as of last year and has made a projection of adding another 100 million users by 2020.

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Cisco in its latest report said that India will have around 900 million internet users due to affordable smartphones and cheaper internet data while the country will boast of having around 2.1 billion internet-connected devices by 2023.

The report also mentioned that Reliance had injected around USD 15 billion to turn Jio into a digital services company in a bid to attract investors till the time of the final listing. The Jio and Facebook deal has come after Microsoft inked a pact with Reliance last year to power its data centers with Azure cord.

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