The partnership between Reliance Industries and Facebook, the world’s largest social network, will empower key stakeholders from small merchants to farmers and health care providers, helping boost ease of living for all Indians and ease of doing business for all entrepreneurs, Mukesh Ambani, the chairman of RIL, said on Wednesday.
RIL, Jio Platforms and Facebook have signed binding agreements, which will see Facebook invest Rs 43,574 crore in Jio Platforms, a wholly owned subsidiary of RIL. Jio Platforms brings together Jio’s digital apps, digital ecosystems and high-speed connectivity platform under one umbrella.
At the outset, it seems like a win-win for both Facebook and Reliance at a time data is increasingly becoming the new oil.
Jio is the largest telecom company in India; Jio Platforms has a subscriber base of 380 million. For Facebook, India, with a population of 1.3 billion, is a key market. WhatsApp has 400 million users in India, making it the largest market for the messaging service, which Mukesh Ambani calls a friend that brings together families, friends, businesses, information seekers and providers.
“The combined power of Jio’s world-class digital connectivity platform and Facebook’s intimate relationship with the Indian people, will offer innovative, new solutions to each one of you,” Ambani said.
To begin with, “in the very near future” Jio’s new commerce platform, JioMart, and WhatsApp will empower nearly 3 crore small grocery stores in the country to digitally transact with every customer in their neighbourhood, he said.
This will enable faster delivery of day-to-day items from local shops for customers and the grocery stores can grow their businesses and create new employment opportunities using digital tools, Mukesh Ambani added. Facebook has already been looking to launch a payments feature on WhatsApp, a move that is stuck due to issues related to data localisation.
Similarly, Jio and Facebook will leverage their partnership to “serve” other key stakeholders like farmers, medium and small enterprises, students and teachers and health care providers, said Mukesh Ambani.
This will happen “in the days to come,” said Mukesh Ambani, without giving any specific timelines. The partnership with Facebook is not the first in the digital ecosystem for RIL. Last year, Jio and Microsoft had entered into a long-term alliance, whereby Jio will set up a network of large datacenters across India and Microsoft will bring its Azure cloud platform into Jio’s datacentres.
In the company’s 42nd annual general meeting in August 2019, Mukesh Ambani had unveiled a bold plan to reduce RIL’s net debt to zero by March 2021 and this deal with Facebook will give the plans a huge boost. The company’s debt at the end of the December 2019-quarter stood at Rs 3.06 lakh crore.
This deal with Facebook is one of several steps Reliance Industries is taking to reduce its debt pile. Last year, it had struck a deal with Aramco, where in the Saudi Arabian oil giant will buy a 20 per cent stake in RIL’s oils-to-chemicals business.
Separately, a deal was announced with British energy giant BP Plc, where the latter would acquire a 49 per cent stake in RIL’s petro-retailing business. The venture plans to expand RIL’s fuel retailing network of over 1,400 retail sites and 30 aviation fuel stations across India to up to 5,500 retail sites and 45 aviation fuel stations over the next five years.
As the world battles the coronavirus pandemic and many countries are in a lockdown to curb the spread, oil prices have crashed. This will hurt RIL’s oil and gas and refining businesses and that means the digital businesses will be increasingly key to driving the earnings growth in the near future.
RIL shares were up over 8 per cent at Rs 1,337.80 on the BSE in late-morning trading on Wednesday.
