Facebook to pick up 10% stake in Mukesh Ambani’s Jio: What the deal means

The partnership with Mukesh Ambani’ Jio would allow Facebook’s Mark Zuckerberg to step up his expansion in India, the second-largest internet market after China, which is rapidly embracing online payment and e-commerce as more people get smartphones.

Facebook Inc will pick up about 10% of Jio Platforms, billionaire Mukesh Ambani owned Reliance Industries Ltd’s digital technology arm, for $5.7 billion, both the companies have said.

Facebook on April 22 announced that it was investing $5.7 billion in Reliance Jio.(Bloomberg)

The US social media company also said the deal would bring together JioMart, an e-commerce venture of Mukesh Ambani, and its WhatsApp platform to enable people to connect with businesses.

The Jio Platforms purchase is Facebook’s biggest since its 2014 acquisition of WhatsApp.

Watch | Facebook to buy 10% stake in Mukesh Ambani’s Reliance Jio in $5.7 billion deal

 

Here is what the deal Facebook-Jio deal means for the companies:

* The partnership with Jio would allow Facebook’s Mark Zuckerberg to step up his expansion in India, the second-largest internet market after China, which is rapidly embracing online payment and e-commerce as more people get smartphones.

* For Facebook, which already has about 250 million users in India, the deal gets it a well-connected ally in India, where WhatsApp is trying to launch a payments service but has run afoul of regulatory scrutiny over fake news and privacy concerns.

* The deal will also help the social media giant leverage WhatsApp to partner with Reliance’s e-commerce marketplace JioMart, that connects small businesses to customers.

* While India will be a testing ground for WhatsApp payment services, currently in pilot, Zuckerberg is also separately looking at the market for his crypto-currency project called Libra.

* For 63-year-old Mukesh Ambani, the deal with the technology giant comes as a boost at a time when his group is battling the impact of the coronavirus pandemic and a slump in demand for crude oil. He has also been seeking to reassure investors that he will honour a pledge to reduce the group’s net debt to zero.

* Working with Facebook would be a boost to the ambitions of Mukesh Ambani, until recently the richest man in Asia, who has been remaking his energy conglomerate as India’s first titan of e-commerce.

* The deal will help Reliance cut debt that has piled up in its expensive push to secure top spot for its Jio Infocomm telecom business.