Social media giant Facebook has acquired a 9.99% stake in Indian billionaire Mukesh Ambani's digital technology business Jio Platforms for $5.7 billion.
The $5.7 billion deal between Facebook and Jio Platforms will give the tech giant a key foothold in India, one of the world's fastest growing internet markets. Jio Platforms is the tech arm of Ambani's conglomerate Reliance Industries.
Ambani’s Jio Platforms
Jio Platforms provides various services under its umbrella, including the mobile network Reliance Jio. It has signed up almost 390 million subscribers since its launch three and a half years ago.
JioMart is Reliance’s retail arm, which is forming a partnership with Facebook-owned messaging platform WhatsApp that could potential enable Facebook to monetize WhatsApp's users in India.
Ambani expressed that Reliance is "humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India."
WhatsApp’s e-commerce venture in India
Facebook’s WhatsApp chat service currently has 400 million users in the country and is poised to launch a payments service.
In a statement, Facebook’s chief revenue officer David Fischer and vice president and managing director for India Ajit Mohan emphasized: "This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country."
They also said that the firm plans to focus on the partnership between WhatsApp and Reliance's e-commerce venture JioMart to enable people to connect with businesses, shops and purchase products.
Fischer and Mohan pointed out that by bringing together JioMart, the company's small business initiative, and WhatsApp, “we can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience.”
Facebook received permission from the Indian government in February to start a phased roll-out of its WhatsApp Pay, two years after it began a trial version of the service in the country.
Reliance Jio also released a statement saying that the deal will be good for both the company and the country as a whole. It stated: "This partnership will accelerate India's all-round development, fulfilling the needs of Indian people and the Indian economy."
India’s growing internet market
India is currently experiencing an internet boom and has become a key market for internet companies. It is also the second-largest smartphone market globally and has potentially millions of users eager to make online purchases, stream music and watch online videos.
What’s more is its potential to grow further as there are still almost 600 million people in the country who are yet to gain access to the internet.
This attractive market India offers has spurred various tech companies to invest billions of dollars into the country, including Alibaba, Amazon, Google, Tencent, and SoftBank.
Bernstein analysts said that the investment in Jio is one of the biggest Facebook can make in the country. They argued: "The transaction fits with their recent push to build themselves and experiment more and provides a closed network of 388 million users ... to build and test a WeChat like app."
Reliance mentioned that the Facebook acquisition values Jio Platforms at almost $66 billion. The deal is yet to receive regulatory approval.
