FB Pixel no scriptFacebook is in talks to acquire a 10% stake in Indian telecom giant Reliance Jio | KrASIA

Facebook is in talks to acquire a 10% stake in Indian telecom giant Reliance Jio

Written by Moulishree Srivastava Published on   2 mins read

Facebook’s chatting platform WhatsApp is preparing for a nation-wide roll out of payment service in the country.

For Silicon Valley-based tech giants, India’s Reliance Jio, which has about 370 million mobile subscribers, has emerged as a company that is better to be friends with than being a rival.

Reliance Jio, the telecom arm of Reliance Industries, India’s largest company by market cap has been looking to create an ecosystem of digital services such as e-commerce, e-grocery, streaming, digital payments, and wealth tech, among others. This might be the reason why American social networking giant Facebook is now looking to buy a “multibillion-dollar stake” in it.

Citing sources who are in the know of the discussions, a Financial Times (FT) report said Facebook is “close to signing a preliminary deal for a 10% share in the heavily indebted Jio,” although “the timetable of a deal has been affected by the global lockdowns caused by the coronavirus outbreak.”

Google was also “engaged in separate talks with Reliance Jio,” one of the sources told FT.

The negotiations come at a time when Facebook is trying to leverage its popular chatting platform WhatsApp with 400 million Indian users to roll out its payment service WhatsApp Pay in the country. Meanwhile, Google’s payment service Google Pay is also rapidly growing in India’s digital payments market, which is expected to reach USD 1 trillion by 2023.

The world’s second-most-populous country, with half a billion smartphone users, a number which is expected to balloon to over 800 million over the next few years, has become crucial for US tech giants to establish dominance in the Asian peninsula, given that China is off-limits for most of them.

This is likely to be a win-win situation for Reliance, which is looking to reduce debt to zero by early 2021, and Facebook, which would get Reliance as a backer that may help it tackle Indian regulatory hurdles better. Facebook had to struggle for over one and a half years to get permission to launch WhatsApp Pay for masses. Previously, in early 2016, the social networking giant had to wrap up its ambitious Free Basics plan, which was aimed at allowing access to its platform and some other websites without a data plan. This is in addition to Facebook getting access to Jio’s massive user base if the deal finalizes.

“The Reliance empire is in serious trouble. The global oil complex is imploding. And Reliance’s fundamental core – the one that has powered all its deals and all its leverage for the last three decades, is now in danger,” said Vivek Durai, founder of business intelligence platform Paper.vc in the company’s newsletter.


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