Facebook plans to acquire a multi-billion dollar stake in Reliance Jio, whose affordable mobile internet service has attracted 370 million Indians in just three years, according to two people who are aware of the discussions.
Facebook was about to sign a preliminary 10 percent stake in the heavily indebted Jio, a person close to the negotiations said, despite the fact that the schedule of a contract was affected by global lockouts caused by the outbreak of the corona virus.
If it continues, the deal would give Facebook an important stop in the Indian market, where its WhatsApp chat service has 400 million users and is about to launch a payment service.
Since the launch of Jio in 2016, Mukesh Ambanis Reliance has emerged as the only Indian company able to compete with U.S. technology companies in the fast growing Indian market.
Bernstein analysts valued Jio at over $ 60 billion.
Google was also involved in separate discussions with Reliance Jio, said one of the people who were informed of the discussions. The talks take place after Microsoft announced plans to partner with Jio last year to bring cloud computing to businesses.
India has become an important market for Facebook and its WhatsApp messaging platform. According to the consulting firm PwC, the number of Internet users in India is expected to increase to around 850 million in 2022, compared to 450 million in 2017. Overall, Facebook is estimated to have more users in India than in any other country.
According to Counterpoint Research, the country overtook the US last year and is the second largest smartphone market in the world after China, making it a high priority for both Silicon Valley companies and their competitors in China.
However, access to the Indian market has become increasingly difficult for Silicon Valley companies as the government has added restrictions to foreign companies operating there, including the proposed Personal Data Protection Act.
A deal with Facebook should be announced later this month, coinciding with the end of the Indian fiscal year.
Reliance’s debt burden has increased as Jio has expanded, and the deal would be part of its plans to reduce net debt to zero by March 2021. The company has also built the largest retail company in India as it takes an aggressive step towards consumer. Towards companies.
To reduce the mountain of debt, Reliance has attempted to sell shares, including 20 percent of its refinery unit to Saudi Aramco, and a $ 3.3 billion Brookfield investment in its tower business.
Facebook has worked with Reliance Jio in the past, including as part of a digital literacy initiative last year. However, the social network got into trouble four years ago in India when the country’s telecommunications authority blocked the “Free Basics” app, which was intended to provide free access to popular internet services such as Wikipedia and weather forecasts as well as its own apps for social networks.
At the time, critics accused Facebook and its Internet.org connectivity initiative of “digital colonialism”.
Reliance announced last year that it would separate Jio into a new company and attract new investors before it was finally listed. Mr. Ambani, India’s richest man, said at the time that the company had “received strong interest from potential strategic partners”.
Reliance and Google did not immediately respond to a request for comment. Facebook declined to comment.