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Facebook is buying a stake in Reliance Jio, India’s largest telecom operator. The deal has boosted Reliance Industries’ share price and is welcomed by the Indian cryptocurrency community. Besides Facebook’s investment into Reliance Jio, Whatsapp has also entered into a partnership with Jio Platforms and Reliance Retail.
Facebook Invests in Reliance Jio — Largest FDI in India’s Tech Sector
Social media giant Facebook announced on Wednesday that it is buying a stake in Reliance Jio, the largest private sector company in India. Facebook signed binding agreements to invest “₹43,574 crore [$5.7 billion]” into Jio Platforms, which represents the largest foreign direct investment (FDI) in India’s technology sector. Reliance Jio independently announced on Wednesday:
" This investment by Facebook values Jio Platforms at ₹4.62 lakh crore pre-money enterprise value … Facebook’s investment will translate into a 9.99% equity stake in Jio Platforms. "
Reliance Jio’s valuation is approximately “$65.95 billion, assuming a conversion rate of ₹70 to a US dollar,” the company’s announcement adds. The deal between Reliance Jio and Facebook costs the social media giant approximately 5.7 billion dollars or 435.74 billion rupees at the current exchange rate.
Following the partnership announcements by Facebook and Reliance Jio, the stock of Reliance Industries Ltd., Reliance Jio’s parent company, spiked. Source: India’s BSE Exchange.
The deal with Facebook has boosted the share price of Reliance Jio’s parent company, Reliance Industries. Its stock was up 10.30% to Rs 1,363.35 on the BSE stock exchange on Wednesday following the news of Facebook’s investment.
Facebook’s Deal With Reliance Jio Amid Nationwide Lockdown and Coronavirus Crisis
Reliance Jio, a wholly owned subsidiary of Reliance Industries, currently has about 388 million subscribers. According to local media, it became the biggest telecom operator in the country by subscriber base early this year. India is the largest market for Facebook and its mobile messaging platform, Whatsapp. In India, Facebook has approximately 328 million monthly users and Whatsapp has more than 400 million users.
Commenting on why Facebook decided to invest in Reliance Jio, CEO Mark Zuckerburg said: “This is especially important right now because small businesses are the core of every economy and they need our support. India has more than 60 million small businesses and millions of people rely on them for jobs.”
“The partnership between Facebook and Jio is unprecedented in many ways. This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India,” Reliance Jio described. Mukesh Ambani, chairman and managing director of Reliance Industries and India’s richest man, said in a statement:
" ln the post-corona era, I am confident of India’s economic recovery and resurgence in the shortest period of time. The partnership will surely make an important contribution to this transformation. "