Facebook has bought a minority stake of little below 10% in Reliance Jio earlier today for Rupees 43,574 crores (roughly 5.7 billion USD).
With a population of over 1.3 billion people, a lot of companies would want to enter India. Facebook is no exception!
For Facebook, India is one of the largest markets when it comes to the number of users. As of Jan 2020, India has 260 million Facebook users as per statista.com. 400 million + WhatsApp users and over 100 million active users on Instagram.
While Jio, on the other hand, is a disruptor in the telecom space in India. In less than 4 years is the market leader with around ~ 32.1% market share in India (source)
Why does this deal make so much sense?
For Facebook –
Facebook had not invested in its biggest market in the last several years. This deal will help Fb to grow along with the largest telecom company in India.
Facebook pay – this deal with Mukesh Bhai can be a game-changer in this area – probably!
Fb would also want to diversify and participate in India’s growth story. To date the major acquisitions made by FB are – WhatsApp (19 billion USD), Instagram (1 billion USD), and Oculus VR (2 billion USD). WhatsApp and Instagram acquisitions have turned out to be of great success in the past.
For Reliance Jio-
This is a win-win as Reliance Jio is planning to leverage WhatsApp for JioMart.
Also with this money Reliance with cut down it 1.5 lakh crore debt. It plans to become a debt-free company in the next couple of years.
Anand Mahindra – Chairman of Mahindra Group tweeted –
Jio’s deal with Facebook is good not just for the two of them. Coming as it does during the virus-crisis, it is a strong signal of India’s economic importance post the crisis. It strengthens hypotheses that the world will pivot to India as a new growth epicentre. Bravo Mukesh!
Is it a bargain deal?
What’s your take?