In what is one of the biggest developments for the Indian telecom industry this year so far, USA social media giant Facebook will go on to buy a 9.99% stake in Indian telecom company, Jio. Both leaders in their respective spaces, Jio has been debt-ridden in recent times and this deal will massively help them get out of debt, while benefitting Facebook get a hold in the market as well.
Don’t let the numbers blind you but yes, the deal was valued at a whopping INR 43,574 Crore, a development which was made public in the early hours of Wednesday, 22nd April. Jio is a unit of Reliance Industries and this sent the shares of the company sky-rocketing early in trade on Wednesday.
Currently, the RIL share is trading at Rs.1,365 a share, up 10.3% in the share market today. Both companies gave separate statements and expressed intentions of opening up commerce opportunities for the people of India. As per reports, this is the largest FDI deal in the technology sector in India and also the largest investment for a minority stake anywhere across the world.
“Reliance Industries Limited, Jio Platforms Limited and Facebook, Inc. today announced the signing of binding agreements for an investment of Rs. 43,574 crore by Facebook into Jio Platforms. This investment by Facebook values Jio Platforms at Rs4.62 lakh crore pre-money enterprise value ($65.95 billion, assuming a conversion rate of Rs70 to a US Dollar). Facebook’s investment will translate into a 9.99% equity stake in Jio Platforms on a fully diluted basis,” RIL said in a statement today.
Facebook largest market is India with 328 million monthly users, thanks mostly to our massive population. Facebook-owned WhatsApp also has 400 million users from India, which is the highest among all countries. The deal with Jio is said to be a win-win for both companies, with plans of providing digital solutions for millions of businesses in India.
Apart from this, Jio Platforms, Reliance Retail and WhatsApp have also entered a partnership which will see an acceleration in the JioMart project on WhatsApp. In the near future, the companies have a plan of empowering around 3 crore small businesses like kirana shop owners to transact digitally with customers using WhatsApp.
“This is especially important right now, because small businesses are the core of every economy and they need our support. India has more than 60 million small businesses and millions of people rely on them for jobs. With communities around the world in lockdown, many of these entrepreneurs need digital tools they can rely on to find and communicate with customers and grow their businesses,” he said. “We’re looking forward to getting started,” Said Facebook owner, Mark Zuckerberg.
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