The deal gives Facebook a 9.99% stake in Reliance Jio at a cost of $5.7bn. It marks the social network’s largest single investment in another company aside from its acquisitions.
Jio is part of the business empire of Mukesh Ambani, India’s richest man, who owns Reliance Industries, a huge conglomerate of businesses in industires from petroleum to property.
“Today we are announcing a $5.7 billion, or INR 43,574 crore, investment in Jio Platforms Limited, part of Reliance Industries Limited, making Facebook its largest minority shareholder,” said Facebook on its corporate website, attributing the comments to David Fischer, chief revenue officer, and Ajit Mohan, VP and India MD.
“India is in the midst of one of the most dynamic social and economic transformations the world has ever seen, driven by the rapid adoption of digital technologies. In just the past five years, more than 560 million people in India have gained access to the Internet.”
Reliance Industries reportedly invested $23 billion before launching Reliance Jio three and a half years ago. In its early iteration it offered low cost, nationwide cellular broadband services. That shook up the existing hierarchy in mobile telecoms in the world’s second most populous nation, and provided the Internet to tens of millions of people who had never previously been online. That in turn powered up Facebook, which now has more users in India than any other single country, and OTT streaming services such as Disney’s Hotstar.
More recently, Reliance Industries has built its own streaming-era media empire. This has included acquiring stakes in TV groups, and the development of its own content production studios.
Reliance Jio now has an array of media operations including music streaming service JioSaavn, broadband, on-demand live television service JioTV, and payments service JioPay. Together these claim 388 million customers. It also owns a 5% minority stake in Eros International, the Bollywood distributor and streaming platform, that last week announced a planner merger with STX Entertainment.
Facebook’s WhatsApp has become the default messaging service 340 million people in India, and the main news aggregator for many. That in turn has attracted regulatory scrutiny. Facebook tried and failed in an attempt to launch its Free Basics Internet service in India.
“We’re making a financial investment, and more than that, we’re committing to work together on some major projects that will open up commerce opportunities for people across India,” said Facebook’s co-founder and chief executive Mark Zuckerberg in a Facebook posting.
“The synergy between Jio and Facebook will help realize Prime Minister Shri 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,” said Mukesh Ambani in a web posting.