According to reports surfacing on Tuesday, Facebook is “close” to buying a 10% stake in the Indian telco; a deal with an estimated value in the multi-billion-dollar bracket.
If successful, the stake would give Facebook unique leverage in a highly lucrative market, while providing Reliance Jio with a means to reduce its debt to zero by March 2021.
Headed by India’s richest man, Mukesh Ambani, Reliance Jio has been valued at US$60 billion.
The only barrier to the deal so far is the global travel restrictions that have been imposed as more than one billion people live under lockdown due to the Covid-19 pandemic.
As the world’s second largest market in terms of internet users, India represents Facebook’s largest user-base in any country, underpinning the firm’s interests in Reliance Jio. However, it isn’t the only US tech firm to hold talks with the Indian telco.
Separate talks are ongoing with Google and last year Microsoft announced it is to partner with Reliance Jio to offer enterprise cloud solutions.
Golden opportunity
Between 2006 and 2019, connectivity in India increased at a compound annual growth rate (CAGR) of 45.74%, according to data from the India Brand Equity Foundation.
The Foundation reports that, in the last four year,s India saw a six-fold increase in Government spending on telecommunications infrastructure and services across the country rising from $1.41 billion between 2009 and 2014, to $8.55 billion between 2014 and 2019.
Over the same period, country-wide Optical Fibre Cable (OFC) coverage doubled, from 700,000km to 1.4 million km
Facebook has acquired more than 80 companies to date through investments and buyouts and has a strong interest in telcos. At Mobile World Congress in 2016, Facebook’s head of engineering unveiled a series of initiatives including the Terragraph and the Telecom Infra Project. Further, Faceboo has worked on trials of OpenCellular with Vodacom in Africa and Telenor in Pakistan, and it has looked into new business models for network roll outs in Peru.
Facebook and Reliance Jio also have a strong history having recently partnered to launch a digital literacy and internet safety campaign in India, in July last year.
