In comments after the Jio deal was announced, Facebook’s Mark Zuckerberg spoke of the presence of “more than 60 million small businesses in India” and helping businesses create new opportunities(Bloomberg)
In comments after the Jio deal was announced, Facebook’s Mark Zuckerberg spoke of the presence of “more than 60 million small businesses in India” and helping businesses create new opportunities(Bloomberg)

The significance of the Jio-Facebook deal| HT Editorial

It is a sign of the enhanced digitisation due to Covid-19. Both companies will benefit
Hindustan Times | By HT Correspondent
PUBLISHED ON APR 22, 2020 06:47 PM IST

Facebook’s investment of Rs 43,574 crore in Jio Platforms (a wholly-owned subsidiary of Reliance Industries) for a 10% stake reaffirms two axioms about valuations in tech and telecom. One, which is old, is that access matters. Jio, with 388 million subscribers at last count, has that in spades — it is the window to the world of 388 million Indians (and because we know that its data-rich network is used by entire families in some cases, probably a lot more). The second axiom, which is new, is that the pace of digitisation has been accelerated by the coronavirus disease (Covid-19); as a corollary, even entities (businesses, government departments, utilities) that thought they had already digitised their operations greatly are discovering how stuck-in-the-physical-world key parts of their processes still are.

This presents a great business opportunity for both. In comments after the Jio deal was announced, Facebook’s Mark Zuckerberg spoke of the presence of “more than 60 million small businesses in India” and helping businesses create new opportunities. There’s already talk that WhatsApp, owned by Facebook, and Reliance Retail could partner, creating a mix of an online-and-offline model. For Reliance, the deal makes great financial sense. Rs 15,000 crore goes to Jio Platforms itself, which will use the money to grow; the rest, around Rs 28,000 crore, will be used by the company to redeem some of the optional convertible debentures parent Reliance Industries holds in it. Reliance will use the money to retire some of its substantial debt of over 1.53 lakh crore. The deal will also help Reliance in its aim of enhancing the revenue from its retail and telecom businesses to 50% of its overall revenue in a few years, from the current 32%. And it can help Facebook, which has had a series of run-ins with the Indian government, navigate the regulatory environment better.

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