On April 21, Facebook announced it had invested $5.7bn in Indian telecoms firm Reliance Jio – the social network’s largest single investment in another company aside from acquisitions. The stake, which accounts for almost 10 percent of Jio’s total equity, makes Facebook the firm’s biggest minority shareholder.
Since its founding in 2016, Reliance Jio has managed to attract nearly 400 million subscribers by undercutting existing service providers such as Bharti Airtel and Vodafone. Now the largest telecoms operator in the country, Jio should help Facebook fight off competition from other online content platforms in what is the world’s second-largest online market.
Reliance Jio has managed to attract nearly 400 million subscribers by undercutting existing service providers such as Bharti Airtel and Vodafone
“One focus of our collaboration with Jio will be creating new ways for people and businesses to operate more effectively in the growing digital economy,” explained David Fischer, Facebook’s Chief Revenue Officer, and Ajit Mohan, the firm’s VP and Managing Director for India, in a joint blog post. “For instance, by bringing together JioMart, Jio’s small business initiative, with the power of WhatsApp, we can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience.”
Another potential benefit for Facebook could be the strengthening of ties with Mukesh Ambani, Reliance Jio’s owner and India’s richest man. The country’s regulatory environment has not always been the most welcoming to western firms, so Ambani’s close connection to Prime Minister Narendra Modi’s government may prove advantageous. In fact, Ambani made specific mention of Modi’s Digital India campaign when announcing the new partnership.
Of course, Facebook’s investment will also deliver benefits for Reliance Jio. The Indian firm’s debt has risen sharply as it has pursued an aggressive expansion plan – Facebook’s cash injection will help bring this debt down to a more manageable level.