InvestorQ : How do you see Reliance Industries being impacted by Facebook buying a 10% stake in Reliance Jio? Do you see that as a positive?
prachi Patwardhan made post

How do you see Reliance Industries being impacted by Facebook buying a 10% stake in Reliance Jio? Do you see that as a positive?

Answer
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6 months ago


This deal related news was doing the rounds for quite some time in investing banking corridors but there is finally confirmation. Reliance Industries, Jio Platforms and Facebook have jointly signed binding agreements for an investment of Rs.43,574 crore by Facebook into Jio Platforms for a 9.99% stake in the Jio subsidiary. This values Jio Platforms at Rs.462,000 crore approximately.

Reliance Jio Infocomm, which provides connectivity platform to over 39 crore subscribers, will remain a wholly-owned subsidiary of Jio Platforms. For Facebook, this is a logical extension of its existing foray into the lucrative Indian markets. India is home to some of Facebook’s most thriving communities on WhatsApp, Facebook and Instagram.

Over the years, Facebook has invested in India and this largest FDI minority investment appears to be one more in that line. For Facebook, this purchase comes with the promise of enabling new opportunities for small businesses across India. For RIL, it is the first in its many steps to reduce the group debt by monetizing some of its franchises.


RIL has debt to the tune of Rs.1.80 trillion and this should be a big value booster. It is clearly a positive for Reliance Industries.




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6 months ago


Reliance is beneficiary of this investment more than facebook for the following reasons.

1. It can reduce its debt from the proceeds of the investment based on T&C of the agreement on how much can be used for debt reduction

2.It will have a huge technological innovation and advancement as facebook has been a leader in the tech segment for a long period and it does know better tech than reliance so the digital strategy of reliance could be pushed smartly by Facebook's strategy. Having said that Facebook is smart enough to chose to invest in reliance but it's a bit complicated to assess the resulting benefits from this investment in more specific terms at this point in time, On a general note Facebook's investment in reliance is to get access to huge user database of Reliance JIO and the growing digital popularity among masses and the plans of reliance to capture local markets is wished to be played by facebook through it's investment in reliance as the likes of Google pay and phonepe are having strong customer base facebook failed to launch one on time and now want to play that through JIO and also we heard an update about whatsapp payment.


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Tisha Malhotra answered.
6 months ago


It is all about transforming the digital landscape of India in the future. The partnership is a great positive for Facebook and also for Reliance. This could give RIL the much needed hedge against a dwindling oil business.