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Facebook-Reliance Jio deal: Social media giant pumps in Rs 43,574 crore in Mukesh Ambani's telco; 10 points

Facebook Reliance Jio deal: Facebook's investment will translate into a 9.99 per cent equity stake in Jio Platforms on a fully diluted basis

twitter-logoBusinessToday.In | October 7, 2020 | Updated 10:18 IST
Facebook-Reliance Jio deal: Social media giant pumps in Rs 43,574 crore in Mukesh Ambani's telco; 10 points
Mark Zuckerberg, Facebook CEO and Mukesh Ambani, RIL Chairman

Facebook, on Wednesday, announced a Rs 43,574 crore ($5.7 billion) investment in Mukesh Ambani-led Jio Platforms Limited. With the investment, Facebook will hold a 9.99 per cent stake in Jio Platforms and will be the largest minority shareholder.

"This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country," Facebook CEO Mark Zuckerberg said in a blog post.

Also read: Facebook-Jio deal: FB investment values Jio Platforms at record Rs 4.6 lakh crore; 5th largest in m-cap

"The synergy between Jio and Facebook will help realise Prime Minister 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. In the post-Corona era, I am confident of India's economic recovery and resurgence in the shortest period of time. The partnership will surely make an important contribution to this transformation," Mukesh Ambani, Chairman and Managing Director, Reliance Industries Ltd, said.

Facebook also added, "Our goal is to enable new opportunities for businesses of all sizes, but especially for the more than 60 million small businesses across India. They account for the majority of jobs in the country, and form the heart and soul of rural and urban communities alike. In the face of the coronavirus, it is important that we both combat this global pandemic now, and lay the groundwork to help people and businesses in the years to come".

Also read: Facebook-Jio deal: Reliance Industries stock gains over 8% after Facebook buys 10% stake in telco arm

Here are 10 key pointers about Facebook-Jio Platforms deal:

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 boost to RIL's JioMart project. For instance, with JioMart, Jio's small business initiative, and WhatsApp together, customers will be able connect with businesses and ultimately purchase products in a seamless mobile experience.

4. The deal will increase Facebook's penetration in India. In just the past five years, more than 560 million people in India have gained access to the internet. Besides, Jio Platforms has a 388 million user base.

5. RIL has been seeking strategic partnerships across its businesses while targeting to deleverage its balance sheet. RIL could leverage Facebook's technology expertise. This apart, the deal would aid the company in achieving zero debt status by March 2021.

6. Facebook has 400-plus million WhatsApp users in India. The  social media platform is seeking to launch a payment app in the country. Having a local partner could help it in navigating various regulatory issues, including those related to privacy and local storage.

7.  The synergy between Jio and Facebook will help realise the goal of 'Digital India'. "In the post-corona era, I am confident of India's economic recovery and resurgence in the shortest period of time," Zuckerberg said.

8. "India is home to some of Facebook's most thriving communities on WhatsApp, Facebook and Instagram. Over the years, Facebook has invested in India based on a strong belief in India's entrepreneurial talent and opportunity, to help create meaningful impact for Indians and Indian businesses using their multiple platforms," RIL said in a press release.

9. David Fischer, Chief Revenue Officer at Facebook, and Ajit Mohan, VP and Managing Director of Facebook India, said one example of such collaboration could be to bring together JioMart and WhatsApp that has more than 400 million users in India. "We can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience," they said.

10. 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.

Also read: Facebook buys 10% stake in Reliance Jio: Here's what Mark Zuckerberg, Mukesh Ambani have to say

Also read: Facebook-Jio deal: Inside Reliance's Rs 1.53 lakh crore debt resolution plan

(Edited by: Mansi Jaswal)

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