Facebook takes up 9.99% stake in Reliance Jio for ₹43,574 crore

Reliance Jio has today announced that the social media giant Facebook will be purchasing 9.99 percent stake in the digital business of Reliance for a price of ₹43,574 crore.

With this investment in Jio, Facebook will become the largest minority stakeholder in the company. Also, the transaction puts the value of the company at ₹4.62 lakh crore or $65.95 billion based on the conversion rate of 1 USD = 70 INR.

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In its quest to become the leading telecom operator in the Indian market, the company has accumulated a lot of debt and this investment will help the company. Reliance is also set to sell a stake in its telecom tower assets to Canadian private equity firm Brookfield Asset Management for over $3 billon.

As of September 2019, Reliance Jio has a debt of more than ₹3 lakh crore or $40 billion. The partnership with Facebook and further sale of stake in other properties of the company will help Reliance with much needed cash to fulfil its promise to cut net debt to zero by March 2021.

In a statement about this partnership, Mark Zuckerberg said: “Facebook is teaming up with Jio Platforms — we’re making a financial investment, and more than that, we’re committing to work together on some major projects that will open up commerce opportunities for people across India. The country is in the middle of a major digital transformation and organizations like Jio have played a big part in getting hundreds of millions of Indian people and small businesses online.”

For Facebook, it will help it introduce payments system to WhatsApp which the company has been trying to do for years. While the system is reportedly ready, the company is stuck in the beta launch mode as the required approvals haven’t come through yet.

Reliance Jio recently announced a new retail business named JioMart and under the partnership, WhatsApp will be used to accelerate the business. Both the companies will work closely to ensure customers can access nearest kirana stores and transact with JioMart using WhatsApp.