Facebook's Reliance deal is a big bet on India's Internet future

LAST week's announcement that Facebook will invest US$5.7 billion in Jio Platforms, which houses the telecom and digital businesses of India's Reliance Industries Ltd, owned by Asia's richest businessman Mukesh Ambani, came as a surprise, coming at it did in the midst of the Covid-19 pandemic.

Reliance Jio, India's biggest telecom operator with around 400 million subscribers, has been subsumed into the newly set-up Jio Platforms which also has other digital assets. Facebook has taken a 9.99 per cent stake in Jio Platforms and board membership with observer status. The deal values Jio Platforms at US$66 billion making it the fifth most valuable Indian company. According to analysts, this is the largest investment for a minority stake by a technology company anywhere in the world and the biggest foreign direct investment in India's technology sector.

India has around 700 million Internet users and another 700 million are waiting to come online. Most of them use mobile devices to go online due to the lowest mobile data charges in the world, pioneered by Reliance Jio which started operations in 2016. Facebook's messaging app, WhatsApp, counts India as its largest market with around 400 million users, and in turn it is the country's No 1 messaging app. The agreement is non-binding and this allows both companies to cut deals elsewhere, meaning that Facebook could look to tie-ups with rival telecom companies in India.