Facebook To Splash Out $5.7 Billion On Stake In Indian Mobile Network Jio

Facebook has announced its intention to close its most significant overseas investment to date with a $.5.7 billion acquisition of a 10% stake in Indian company Jio Platforms. Jio Platforms is the parent company of Reliance Jio Infocomm, a mobile network that services 388 million subscribers on the subcontinent. Jio Platforms is in turn owned by Mukesh Ambani, India’s richest man, through his Reliance Industries conglomerate.

Like many major internet companies, both from the USA and China, Facebook sees its investment in Jio as a platform for greater market penetration in India. With a quickly growing population of 1.3 billion, only 560 million of which had access to the internet as of 2019, India is a market that big tech is eager to tap into. Especially within the context of the country’s growing middle class and stated government aim to extend connectivity of the population over coming years.

WhatsApp, the encrypted messaging app owned by Facebook, already counts India as its biggest market for users. 400 million Indians use the app, about 150 million more than use Facebook itself. Instagram, also owned by Facebook, also has a quickly growing userbase in the giant country.

The deal was announced on Tuesday night and once confirmed by regulators will represent Facebook’s biggest investment since the 2014 acquisition of WhatsApp itself for $22 billion. Facebook, itself valued at a colossal $520 billion despite its share price taking a hit during the Covid-19 market sell-off, will become Jio Platforms’ largest minority shareholder.

Facebook founder and CEO Mark Zuckerberg commented on the announcement “we’re committing to work together on some major projects that will open up commerce opportunities for people across India”.

Reliance Jio Infocomm has grown its subscriber base rapidly in the four years since it came to market by offering high speed mobile data plans at lower prices than its competitors. With many regions of India poorly services by fixed telecoms infrastructure, mobile networks are even more important to the country than they are in developed economies.

In keeping with the trend of internet and mobile tech companies, the company owns several other digital business in addition to its core mobile network, including the popular Jiomart app, which provides easy and affordable digital payments services for small businesses.

Mr Ambari sees the tie-up with WhatsApp as a strategic move that will allow as many as 30 million small shops in the country to begin taking digital payments. The Covid-19 pandemic is expected to accelerate the trend towards a cashless economy, even in developing economies like India’s. He explained:

“This means all of you can order and get faster delivery of day-to-day items from nearby local shops.”

Shares in Jio-parent Reliance were yesterday up 10% on the Mumbai stock exchange, while Facebook’s yesterday gained 6.7% in New York.