Reliance Jio Connects With Facebook For $5.7 Billion Equity Deal

Facebook and Reliance Jio hit the headlines early Wednesday morning, in a break from the daily lockdown news. Mark Zuckerberg announced in a Facebook post that the technology giant will acquire a 9.99 per cent stake in Jio Platforms Ltd (JPL) through a fresh issue of shares worth Rs 43,574 crore. The deal values JPL—the holding company of Reliance Jio — at an enterprise value Rs 4.62 trillion.

Sanchit Vir Gogia, founder and chief analyst at Greyhound Research, said the Jio-Facebook deal is a content and commerce game. Facebook’s Meesho access combined with JioMart WhatsApp will help it access a vast unorganised market. Facebook’s Marketplace is also bound to be in the picture.

Whatsapp is a big part of the deal, especially once WhatsApp Pay gets rolled out. It will be an opportunity for Jio also because JioMoney hasn’t done too well.

Facebook’s growth has been stagnating in India. Beyond a point, selling advertising is tough, and that has been Facebook’s only source of revenue so far. The deal couldn’t have come at a better time for Facebook because post Covid, advertising is going to take a hit.

[Business Standard]

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Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Technology & Innovation Research & Advisory firm. To read more about him, click here.

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