Facebook to buy 10% stake in Reliance Industries’ telecommunications unit in India for $ 5.7 billion

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BENGALURU (Reuters) – Facebook (FB.O) will purchase a 10% interest in the digital activities of Reliance Industries in India (RELI.NS) for $ 5.7 billion as the social media company seeks to leverage its popular WhatsApp chat service to deliver digital payment services.

FILE PHOTO: A 3D printed Facebook logo is placed between small toy figures in front of a keyboard in this illustration taken on April 12, 2020. REUTERS / Dado Ruvic / Illustration

The deal will help the Indian conglomerate reduce the debt that has accumulated in its costly push to secure first place for its telecommunications company Jio Infocomm.

Facebook’s investment will make it the largest minority shareholder in Jio Platforms Ltd, Jio bit.ly/34Wzy1a said in a statement on Wednesday, putting the enterprise value of the business at around $ 66 billion. Jio Platforms owns a multitude of digital assets from Reliance, including Jio Infocomm.

WhatsApp is seeking approval to deploy its digital payment service in India, which will allow it to compete in a crowded market with Google Pay (GOOGL.O) and Paytm. Approval of the extension beyond launching the beta has yet to be granted, a Facebook spokesperson said.

The messaging service has 400 million users in India, its largest market, reaching almost 80% of smartphone users in the country. The deal will also help the social media giant leverage WhatsApp here to partner with Reliance’s ecommerce market, JioMart, which connects small businesses to customers.

“(India) is in the midst of a major digital transformation and organizations like Jio have played a big role in bringing hundreds of millions of Indians and small businesses online,” said the CEO of the Facebook founder. , Mark Zuckerberg, www.facebook.com/zuck in a publication.

For Reliance, whose debt stood at more than $ 40 billion in September, the partnership will provide the funding it needs to deliver on its promise to bring net debt to zero by March 2021.

Reliance Industries, controlled by billionaire Mukesh Ambani, is also expected to sell a fifth of its petroleum and chemical refining operations to Saudi Aramco for around $ 15 billion, and a stake in its telecommunications tower assets to the company. Canadian private equity Brookfield Asset Management for more than $ 3. ridge.

While Jio became the country’s largest mobile operator in about three years of its launch, Reliance, headquartered in Mumbai, has also rapidly expanded its retail business, which now has more than 10,000 stores selling groceries, consumer electronics and clothing.

Together, the revenues of these two companies jumped more than 25% in the December quarter.

Last month, the Financial Times reported that Facebook was in talks for a 10% stake in Jio, but talks were halted due to a worldwide travel ban due to the coronavirus epidemic.

Jio said Morgan Stanley was the financial advisor to the deal. AZB & Partners and Davis Polk & Wardwell were lawyers.

Bhargav Acharya reports to Bengaluru; Additional reports from Subrat Patnaik to Bengaluru and Katie Paul to San Francisco; Written by Sayantani Ghosh; Edited by Ramakrishnan M & Shri Navaratnam

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