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Facebook Buys a 9.99% stake in Reliance Jio at Rs 43,574 crore
3 years ago
Facebook on 22 April, Wednesday announced an investment of USD 5.7 billion (Rs 43,574 crore) to buy a 9.99% stake in Mukesh Ambani’s telecom Reliance Jio. This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI within the Indian tech sector. According to the current lockdown situation, many entrepreneurs need digital tools to communicate with customers and growing their businesses. This is how Facebook and Jio deal will help people and businesses in India to create new commerce opportunities across India. Reliance Chairman Mukesh Ambani said everyone at Reliance is “humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India” and can help in fulfilling Prime Minister Narendra Modi Digital India mission dream.
Why Facebook is spending millions for a minority stake in Jio
With Jio’s 388 million customers, Facebook will help people and businesses to operate more effectively in this digital world. For example, by connecting JioMart, Jio’s small business initiative, with the power of WhatsApp, Facebook can enable people to connect with businesses. Facebook also owns a minority stake in other Indian companies such as Meesho a social commerce company and Unacademy, an online education startup. For Facebook, India has emerged as an important market in recent years. India has more users of Facebook than any other country. The deal will help reduce RIL’s debt burden, which has emerged because of the rapid expansion of Jio and other businesses.
How Jio and Facebook can work together to make an invasion in India’s internet
1.Virtual Reality (VR)
Facebook was the first company to make consumer VR headset Oculus. Jio already has tied its both virtual and augmented reality (AR) experiences with its broadband service. Jio could add Oculus into this to enhance the worth proposition.
2. Video Streaming
India’s video streaming market is expected to grow to 488 million viewers by 2022. Facebook and Jio have their video streaming platform. While Facebook has its live video streaming platform and Jio has Jiomovies platform only available to Jio subscribers for free. Both the platform Facebook and Jio can enhance the offerings of one another and use their partnership to capitalize on this growth.
3. Payments
Both Facebook and Jio are involved in the payment space. While Jio has the JioMoney application, Facebook is awaiting regulatory approval to enable digital payments in India through WhatsApp which is a UPI-based payments application. However, Facebook is also working on the Libra cryptocurrency service. It is expected that Facebook can bring libra to India for experimenting with cryptocurrency payment on a large scale.
Wake up call for amazon and Flipkart
The nationwide lockdown has exposed the weaknesses of the e-commerce businesses, while neighborhood kiranas stores offer better service to customers. Facebook and RIL, the first collaboration will happen over the reliance e-commerce venture JioMart. Jiomart to use WhatsApp’s business features to quickly bring local Kirana stores on board to reach out to customers and to help 60 million small businesses in India. This deal will be a wake-up call for amazon and Flipkart. As they need to review their business model or logistics services to fulfill the grocery demand. The Jio-Facebook deal is an attempt to marry the local commerce with the social part and to hold the trend, and eventually, this will be a lift to the Facebook ad platform as well.
