Text Size: A- A+

Mumbai/San Francisco/Hong Kong: Facebook Inc. will invest $5.7 billion in the digital assets controlled by India’s richest man, as the U.S. social-networking giant seeks a broader foothold in its biggest global market.

The U.S. company will buy about 10% of Jio Platforms, becoming the largest minority shareholder, Reliance Industries Ltd. said in a statement Wednesday. Separately, Facebook said the deal would bring together JioMart, an ecommerce venture of Mukesh Ambani and its WhatsApp platform to enable people to connect with businesses.

The investment values Jio Platforms at a pre-money enterprise value of about $66 billion, the Indian company said.

The deal with Jio would allow Facebook Chief Executive Officer Mark Zuckerberg to step up his expansion in a country that is rapidly embracing online payment and e-commerce as more people get smartphones. Reliance Jio Infocomm Ltd. burst onto the Indian wireless telecommunications market about four years ago, quickly moving into a position of dominance by offering free plans and undercutting rivals. Working with Facebook would be a boost to the ambitions of Ambani, until recently the richest man in Asia, who has been remaking his energy conglomerate as India’s first titan of e-commerce.

“This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country,” Facebook said in its statement.

Zuckerberg has long aimed to roll out a digital currency as well as tools that let users make payments and buy and sell products over the social network’s messaging services in India.

Untapped Potential

With its half-billion internet users, the South Asian country is an alluring market for the world’s largest technology companies, including Amazon.com Inc., Apple Inc., Microsoft Corp. and Alphabet Inc.’s Google. In India, Facebook has about 250 million users, while WhatsApp has over 400 million.

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. Zuckerberg has said that payments and commerce are a priority, representing a major business opportunity for the company moving forward.

After building a wireless carrier and a retail business, Ambani has said he plans to rope in “leading global partners” before initial public offerings as he readies an e-commerce business that would rival Amazon and Walmart Inc. in the South Asian country.

The new businesses are likely to account for 50% of Reliance Industries Ltd.’s earnings in a few years, versus a little more than 32% now, Ambani told shareholders in August.

Jio Platforms, a wholly owned unit of Reliance Industries, brings together Jio’s digital apps, ecosystems and the wireless carrier’s platform under one umbrella, according to Reliance Industries.

Reliance and Facebook are exploring the possibility of creating an app similar to WeChat, the Chinese mobile messaging and payment service run by Tencent Holdings Ltd., India’s Economic Times newspaper reported last week, citing people it didn’t name.

Reports of the impending investment have revived investor confidence that Ambani, 63, will be able to move closer to his avowed goal of reducing the group’s net debt to zero by early 2021.

Negotiations to sell a stake in Reliance Industries’ oil-and-chemicals division to Saudi Arabian Oil Co. have dragged on for months, while the coronavirus crisis and a crash in oil prices have raised doubts if that deal will be signed.

The Indian company spent almost $50 billion — mostly borrowings — to build Jio Infocomm, the mobile carrier, leading to a net debt of more than $20 billion as of March 2019. –Bloomberg

Also read: Facebook, Google to be forced to pay media companies for news in Australia

Subscribe to our channels on YouTube & Telegram

Why news media is in crisis & How you can fix it You are reading this because you value good, intelligent and objective journalism. We thank you for your time and your trust. You also know that the news media is facing an unprecedented crisis. It is likely that you are also hearing of the brutal layoffs and pay-cuts hitting the industry. There are many reasons why the media’s economics is broken. But a big one is that good people are not yet paying enough for good journalism. We have a newsroom filled with talented young reporters. We also have the country’s most robust editing and fact-checking team, finest news photographers and video professionals. We are building India’s most ambitious and energetic news platform. And have just turned three. At ThePrint, we invest in quality journalists. We pay them fairly. As you may have noticed, we do not flinch from spending whatever it takes to make sure our reporters reach where the story is. This comes with a sizable cost. For us to continue bringing quality journalism, we need readers like you to pay for it. If you think we deserve your support, do join us in this endeavour to strengthen fair, free, courageous and questioning journalism. Please click on the link below. Your support will define ThePrint’s future. Support Our Journalism

Show Full Article