Facebook and Google reportedly wanted stakes in India’s Reliance Jio

Reliance Jio has seen astronomical growth ever since it entered the Indian telecom sector back in September 2016. The company’s success has allowed it to diversify into various other verticals, like home broadband and e-commerce, where it has opted for the same strategy of offering services at a price point that undercuts the competition by a significant margin. Jio’s rise in popularity seems to have caught the attention of silicon valley giants like Facebook and Google, as a recent report from Financial Times suggests that the companies are eyeing a multibillion-dollar stake in the company.

The report cites two people familiar with the matter who have revealed that Facebook is currently in talks to purchase a significant stake in Reliance Jio. The domestic telecom service provider, which has close to 370 million active users, was close to signing a preliminary deal with Facebook for a 10% share in the company. However, the timeline of the deal has been affected by the global lockdown caused by the ongoing COVID-19 crisis. In case the deal proceeds as highlighted, Facebook will gain a stronger foothold in the Indian market, where it already has a large user base. The deal, which had previously been scheduled to be announced later this month, is part of Jio’s parent company Reliance Industries Ltd’s plans to reduce debt.

It’s also worth noting that Reliance, which is part of billionaire Mukesh Ambani’s empire, had revealed plans to cut net debt to zero by 2021. To do so, Reliance seeks to sell off stakes, including 20 percent of its refining unit to Saudi Aramco, and a $3.3bn investment by Brookfield in its tower business. The pending deal with Facebook will also work towards helping Reliance achieve its net-zero debt goals. Additionally, the report also reveals that Google is also engaged in separate talks with Reliance Jio according to one of the people briefed on the discussions. This builds upon Microsoft’s announcement from last year, where it revealed plans to partner with Jio to offer cloud computing services to businesses in the country. Interestingly, the report has had a positive effect on Reliance Industries Ltd’s stock, which surged by 20% following the revelation.

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Source: Financial Times

Via: Bloomberg

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