Facebook has had unprecedented reach in India for more than a decade. But while China’s rapid growth ByteDance appears to be a formidable competitor in what has become the world’s second largest Internet market, the American social media giant has found the horse it wants to bet on in the new decade.
Facebook announced today that it has invested $ 5.7 billion for a 9.99% stake in Indian telecom operator Reliance Jio with more than 370 million subscribers. The deal valued Jio at a pre-silver valuation of $ 65.95 billion.
Under the terms of the agreement, the American company will become the largest minority shareholder in Jio, a three-and-a-half-year subsidiary of the most popular Indian company, Reliance Industries.
The social giant said he will focus on working with Jio to create “new ways for people and businesses to operate more efficiently in the growing digital economy.” It is the largest investment for a minority stake in a technology company anywhere in the world and the largest foreign direct investment in the technology space in India.
David Fischer, Chief Revenue Officer at Facebook, and Ajit Mohan, Vice President and General Manager of Facebook India, said that an example of such collaboration could be bringing together JioMart, Jio’s small business initiative, with WhatsApp, which counts India as its largest market with more than 400 million users.
“We can allow people to connect to businesses, shop and ultimately buy products in a seamless mobile experience,” they said.
Reliance Jio, which began commercial operations in the second half of 2016, has shaken up the local telecommunications market by providing a large chunk of 4G data and free voice calls for six months. The telephone company started a price war that forced local network providers Vodafone and Airtel to revise their data plans and mobile rates; however, they struggled to match the offerings of Jio, who became the country’s largest telecommunications operator.
Reaching Jio users could be of interest to Facebook, which has tried and failed to expand its Free Internet initiative, Free Basics, in India. (The company has since expanded Wi-Fi Express to India – although its potential and scale are relatively small.)
Reliance Jio also has a suite of services (including the JioSaavn music streaming service, which it plans to make public), smartphones, broadband services, JioTV live-on-demand TV service, and JioPay payment.
“We are making a financial investment, and more importantly, we are committed to working together on some major projects that will open up business opportunities for people across India,” said Mark Zuckerberg, co-founder and CEO of Facebook, in a message.
In recent quarters, Facebook has started to take an interest in local startups. Last year, the company invested in Meesho social commerce; and earlier this year, he wrote a check to the startup edtech Unacademy. Facebook has invested around $ 15 million each in these two startups.
Mohan told TechCrunch in an interview last year that the company is open to engaging with startups that are developing solutions for the Indian market for more investment opportunities. “Wherever we think there are opportunities beyond the work we do today, we are open to exploring new investment agreements,” he said.
But for Facebook, there could be an additional advantage in this agreement: Mukesh Ambani. The richest man in India is a close ally of Indian Prime Minister Narendra Modi, and his company has always supported the political proposals of the ruling government. And Facebook has received more control than ever in India in recent years under the Modi government.
In a statement, Ambani said: “When Reliance launched Jio in 2016, we were driven by the INDIA’S DIGITAL SARVODAYA - India Digital Rise dream to improve the quality of life for every Indian and propel the India as the first digital company in the world. . All of us at Reliance are therefore touched by the opportunity to welcome Facebook as our long-term partner while continuing to grow and transform India’s digital ecosystem for the benefit of all Indians. “
“The synergy between Jio and Facebook will help achieve Prime Minister Shri Narendra Modi’s” Digital India “mission with its two ambitious goals -” Ease of Living “and” Ease of Doing Business “- for every category of Indian without exception. In the post-Corona era, I am convinced of India’s economic recovery and resurgence in the shortest possible time. The partnership will certainly make an important contribution to this transformation, ”he added.
For over a decade, the Indian market has been a duopoly between Facebook and Google. Reliance Jio has built services for consumers, but very few of them directly compete with one of the main offerings of the American giants. But in recent years, the ByteDance TikTok has gained users that all of these companies have struggled to reach. TikTok has amassed over 250 million users in India (last year), and the company says it is on track to add another 100 million this year.
Jayanth Kolla, analyst at Convergence Catalyst, said that TikTok had blinded Facebook and reached users that the American company had not yet. Facebook has, as you might expect, attempted to create a similar service called Lasso. But he is currently testing it in limited markets, and India is not one of them.