Bangalore, April 23 2020: Facebook’s US$5.7bn investment for a 9.99% stake in the India-based Reliance Industrie’ Jio Platforms, announced yesterday, has been generally welcomes by analysts and industry monitors.
We bring you some early reactions:
Says Aurojyoti Bose, Lead Analyst at data and analytics company at GlobalData:
“The deal, which is India’s largest foreign direct investment for a minority stake, came at a time when economies and businesses globally are reeling under the impact of coronavirus (Covid-19) pandemic. It further enhances the importance of the transaction and seems like a well devised approach offering win-win situation for both the companies.”
“India is a key market for Facebook with millions of users and its messaging app WhatsApp also has a huge user base. On the other hand, Jio is one of the largest telecom networks in India with around 370 million subscriber base and the deal can help Facebook in further enhancing its footprint in the country.”
“The deal has become even more crucial for Facebook as its WhatApp is planning to roll out payments app in India and with Jio as its local partner will be pivotal in navigating the regulatory hurdles . Moreover, encouraged by the growing popularity of TikTok, Facebook has plans to launch video app Lasso, which will benefit from Jio’s huge subscriber base in India.”
“Jio will benefit from the technology expertise of Facebook. In addition, the deal is a step forward towards Jio’s strategy to make it debt free and the company is expected to attain debt free status by March 2021. This investment has put Jio Platforms Limited’s valuation at US$65.95bn and it has now become the fifth largest company in India in terms of market capitalization.
“Collaborating WhatsApp with JioMart (Jio’s e-commerce venture that help customers in connecting with businesses and making purchases) is also on the cards. It is likely to aid in delivering groceries to customers from nearby stores. This is even more timely now that the demand for online grocery delivery services has gone up amidst lockdown due to Covid-19.”
Prof Davinder Singh, Assistan Dean - SoM, BML Munjal University.
“Reliance needs an infusion of large amounts of cash to reduce its debt of close to $ 40 billion. The 20% stake in RIL to be picked up by Aramco has been behind schedule due to multiple reasons. The crude oil price war between Saudi and Russia has been on even prior to the current situation due to COVID 19. An arbitration with Indian Government related to accounting practices of certain fields is another.”
“The $5.7 billion will not only ease the debt but will also position RIL to offset the financial impact by the strong decline in oil economy worldwide due to COVID19. Technology is the one sector which has benefitted hugely from the situation. Combining technology and mobile platforms allow for synergies and convergence which will be hard to compete against for the companies in pure technology or pure mobile telephony.”
“The coming together of Jio Mobile (carrier), WhatsApp (Communication system) and e-commerce of Facebook, all three together on a single platform can create an e-marketplace for small businesses which will allow them to compete with large e-tailers. While the last mile connectivity continues to be a challenge and expensive, but the expected extended periods of restricted movement due to COVID19 will encourage the users to prefer linking with smaller businesses which are physically closer to them then the large e-tailers who might be cheaper but have a challenge to deliver in situations which have been encountered recently.”
Shrenik Gandhi, Chief Executive Officer and Co-Founder, White Rivers Media
"Glad to be seeing such positive news in such grim times. This investment not only has monetary benefits for both organisations, but has economic benefit for the nation. This deal will empower digital transformation of millions which shall boost not only the digital ecosystem but also the nation. The next 100M internet users will be easier to get on board thanks to this deal. I am pretty sure, in the post Covid world, the world will be closely watching India!"
Read our earlier report on the Facebook-Jio deal here