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Facebook acquires stake of 9.9% in Jio

Facebook recharge with "JIO" worth Rs 43,574 crore

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Facebook has bought a 9.9% stake in Reliance Jio for $5.7 billion (Rs 43,574 crore), the telecom unit of Reliance Industries Ltd (RIL) in a deal that gives the social media giant a firm foothold in a fast-growing massive market and helps the Indian oil-to-telecom conglomerate to significantly cut debt. The deal values Jio at Rs 4.62 lakh crore ($65.95 billion).

Commenting on the deal, RIL said this is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India. The investment values Jio Platforms amongst the top 5 listed companies in India by market capitalization, within just three and a half years of launch of commercial services, it said in a statement. In the ecommerce and hyperlocal space, Jio Platforms will now compete with Google, Amazon and Walmart-backed Flipkart. In the digital payments space, it will compete with Paytm, GPay and PhonePe. Jio now eyes 60 million small businesses across the country which are the fabric of the unorganised retail economy. “With communities around the world in a lockdown, many of these entrepreneurs need digital tools they can use to find and communicate with customers to grow their business," said Facebook CEO Mark Zuckerberg in a Facebook post today.

By bringing together JioMart, Jio’s small business initiative, with the power of WhatsApp, will enable people to connect with small businesses, kirana shops and purchase products online from traditional stores.

Earlier this year, telecom operator Bharti Airtel and Google Cloud announced a partnership to offer G Suite to small and medium sized businesses (SMBs) in India as part of its integrated information and communication technology portfolio. G Suite is a set of intelligent apps--Gmail, Docs, Drive, Calendar and more--designed with real-time collaboration and machine intelligence to bring people together and help them work in a smarter and safer way. In 2019, Reliance Jio announced a 10-year deal with Microsoft to help the operator set up a network of large data centres across India. The tech giant will deploy its Azure cloud platform in these centers to support offerings. Jio had announced it will also provide the combined cloud-Microsoft app infrastructure free of cost to startups and for a monthly fee of ₹1,500 to micro, small, and medium enterprises.

Airtel, on its part, offers Google potential access to over 2,500 large enterprises and over 5,000 small enterprises through this partnership. Traditionally, Microsoft has a large enterprise presence in the country. Google has a presence in the B2C market, thanks to the prevalence of Android smartphones.

The Facebook deal is now the centrepiece of the ambitions of India’s biggest private company to cut net debt to zero by March 2021. RIL has in recent months accelerated efforts to reduce debt by attempting to sell stakes worth billions of dollars in some of its businesses. It is in talks with Saudi Aramco to sell 20 percent of its oil to chemicals business and Canadian private equity firm Brookfield Asset Management for a stake in its telecom tower business. For Facebook, India has in recent years emerged as a critical market. The company has more users in India than any other country. Its WhatsApp chat service, which has attracted 340 million users and is about to launch a key payments service will take on incumbents Paytm, Google Pay, PhonePe and Amazon Pay.

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