The much-awaited deal between Facebook founder Mark Zuckerberg and India’s richest man Mukesh Ambani was announced on Wednesday, as reported in Forbes. The two companies announced on Wednesday that Facebook has agreed to buy a 10% stake in Jio Platforms, the telecom and broadband unit of Ambani’s oil and petrochemicals, Reliance Industries for 5.7 billion dollars.
The deal, which provides the Jio platform with an enterprise value of around $ 66 billion, will help its parent Reliance Industries cut its heavy debt load, which was around $ 43 billion at the end of December. The company said it had zero net debt plans by March 2021.
Facebook’s CEO Mark Zuckerberg said in a statement on his Facebook page.
Ambani, chairman of Reliance Industries, with current assets of $ 49.3 billion, said in a video statement that the relationship with Facebook “will help realize Prime Minister 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.”
Currently, Mark Zuckerberg has total assets of $ 63.3 billion.
Today we are announcing a $5.7 billion, or INR 43,574 crore, investment in Jio Platforms Limited, part of Reliance Industries Limited, making Facebook its largest minority shareholder. This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country.
Jio has 388 million subscribers in India, while Facebook’s WhatsApp has 400 million users, making it the platform’s largest market. Facebook’s Chief Revenue Officer David Fisher and Managing Director for India, Ajit Mohan, said in a statement, “will create new ways for businesses to work more effectively in people and in a growing digital economy.”
Here are some key pointers about Facebook-Jio Platforms deal:
- The deal was agreed to the Jio platform at a 4.62 lakh crore ($ 65.95 billion) pre-money enterprise value, at a conversion rate of US $ 70.
- Facebook’s investment will translate into a 9.99 percent equity stake in Jio platforms on a fully diluted basis.
- The deal is likely to boost RIL’s JioMart project. For example, with JioMart, Jio’s small business initiative and WhatsApp, customers will be able to connect with businesses and eventually purchase products in a seamless mobile experience.
- This deal will increase Facebook admittance in India. In the last five years, more than 560 million people in India have used the Internet. Apart from this, Jio Platforms has a 388 million user base.
- Facebook has more than 400 million WhatsApp users in India. The social media platform is seeking to launch a payment app in the country. Having a local partner can help navigate a variety of regulatory issues, including those related to privacy and local storage.
- “India is one of Facebook’s most affluent communities on WhatsApp, Facebook and Instagram. Over the years, Facebook has invested in India based on a strong belief in entrepreneurial talent and opportunity in India and for Indian businesses. It helps create a meaningful impact.” RIL said in a press release.
- This is not the first time Facebook has bought a stake in an Indian company. Facebook has a minority stake in social commerce company Meesho and online education startup Unacademy.
This was to happen as Ambani had already shaken up India’s hyper-competitive telecom industry by launching a price war with the launch of its 4G phone service Jio in 2016, helping bring hundreds of millions of new users online, as This led to the closure of many companies.