Following the announcement of Facebook’s US$5.7bn investment for 9.99% stake in India-based Jio Platforms Limited (JPL) on 22 April 2019; Aurojyoti Bose, Lead Analyst at GlobalData, a leading data and analytics company, offers his view on the deal:
“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.
The GlobalData Analyst also added, “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.”