All You Need To Know: Facebook Purchase 9.9% Stake in Jio
The Indian private sector felt a massive jolt on Wednesday, April 22, 2020. However, it was not because another company got drowned by the impact of Coronavirus.
The reason behind this hustle bustle was – the world’s largest social media company Facebook bought India’s largest conglomerate Jio’s minority stake. One may call it minority stake, but this 9.9% stake cost Facebook a whopping $5.7 billion (Rs 43,574 crore).
With this acquisition by Facebook, the total value of Jio got raised to 4.62 lakh crore or $65.95 billion.
This is the largest Foreign Direct Investment (FDI) in the tech sector in the history of India. In an official statement released by Reliance Industries Limited (RIL), the company declared that Jio has now entered in the list of India’s top five companies according to market value.
Facebook also released an official statement after the acquisition. The statement said, “This investment underscores our commitment to India and our excitement for the dramatic transformation that Jio has spurred in the country. In less than four years, Jio has brought more than 388 million people online, fueling the creation of innovative new enterprises and connecting people in new ways. We are committed to connecting more people in India together with Jio.”
Jio was founded in 2016 by India’s richest businessman Mukesh Ambani. In a period of mere three years, it has become India’s largest telecom company. With different services like Games, Movies and Music, Jio has acquired more than 340 million customers across India. During its inception, Mukesh Ambani invested $40 billion in Jio. The company has made large profits; still, it’s a debt-ridden company as Mr. Ambani has expended it aggressively. Starting from this acquisition, Jio is on its way to reduce the debt.
The Mutual Benefit
Now that Facebook and Jio are in a commercial relationship, their benefits will get aligned with each other naturally. The newly-established JioMart is planning to add small business in it.
While Facebook-owned Whatsapp is planning to launch its own payment service like Amazon Pay, Google Pay and Phonepe, both companies can use each other’s platform to get a mutual benefit.
Chinese companies like TikTok is giving Facebook a hard challenge in India. According to a research, India will have more than 900 million Internet users by 2023. Facebook will try to use Jio’s loyal customer base of 340 million people to get ahead of TikTok.
It has been only two days since the acquisition and the two giants have already differed on a key issue on data collection centres.
Earlier, Facebook has also bought stake in Indian companies like in Meesho — a social commerce company and Unacademy — an online education startup.
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