Social networking giant Facebook is reportedly in talks with Mukesh Ambani’s Reliance Industries to invest multi-billion dollars in Jio, India’s largest telecom company. The report sent Reliance’s shares soaring close to 6.4 per cent at Rs 1,003.10 on the BSE in morning trades.
The Financial Times newspaper reported that Facebook was keen to acquire a 10 per cent stake in Jio. The two sides were close to signing a preliminary deal, however, the negotiations stalled following the COVID-19 outbreak and the travel bans imposed around the world, the report added, quoting two unnamed people familiar with the matter.
Neither, Facebook nor Reliance have commented on the report so far.
Reliance Jio made a big bang entry into India’s telecom industry over three years ago, with its 4G VOLTE services. Over that period, it has become the largest and the most profitable player in the industry with a market share of over 32 per cent and a subscriber base of around 370 million.
On the other hand, India is a big market for Facebook, too. It is estimated that the social network has the most number of users than in any other single country. Its messaging platform—WhatsApp—too, has close to 400 million users in India.
In 2019, Reliance Jio had launched a digital literacy initiative ‘Digital Udaan’ in partnership with Facebook for first-time internet users.
India is now the second largest smartphone market in the world with 158 million shipments in 2019, according to data from Counterpoint Research. It is, therefore, a big market for global tech companies, like Facebook, which also owns Instagram.
However, the Indian government’s Personal Data Protection Bill, which includes powers to request user data, is a potential stumbling block. The Draft Intermediary Guidelines Rules also calls for any intermediary with a user base of 50 lakh to have a permanent registered office in India.
Meanwhile, a potential deal now with Facebook for a stake sale will help Reliance take one step further in its aim to pare its debt.
At Reliance’s Annual General Meeting in August 2019, chairman Mukesh Ambani had laid out a roadmap to become a zero net-debt company in 18 months by March 31, 2021.
Ambani had told shareholders that Reliance had received strong interest from strategic and financial investors in Reliance Retail and Jio. It planned to induct leading global partners in these businesses over the next few quarters and move towards listing both Reliance Retail and Jio within the next five years, he had added.
