Facebook picks stake in Jio Platform for $5.7bn

SOCIAL media giant Facebook announced an investment of $5.7 billion to buy a 10 per cent stake in the firm that houses billionaire Mukesh Ambani’s telecom arm Jio as the social media giant looks to expand presence in its largest market in terms of subscriber base.

‘Today we are announcing a $5.7bn, or Rs 43,574 crore, investment in Jio Platforms Ltd, part of Reliance Industries Ltd, making Facebook its largest minority shareholder,’ the company said in a statement.

Reliance in a separate statement said the investment by Facebook values Jio Platforms at Rs 4.62 trillion pre-money enterprise value ($ 65.95bn).

‘Facebook’s investment will translate into a 9.99 per cent equity stake in Jio Platforms on a fully diluted basis,’ it said.

Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd (RIL), houses digital services of the group. Reliance Jio Infocomm Ltd, with 388 million subscribers, is a wholly-owned subsidiary of Jio Platforms.

Facebook’s move to pick up about 10 per cent stake in Jio Platforms will accelerate Jio’s digital monetisation drive and put Reliance Industries (RIL) on course to turn net debt-free by March 2021, analysts said.

‘RIL had restructured its digital business into one consolidated wholly-owned subsidiary - Jio Platforms - which would host all the digital initiatives of the firm, including Jio digital services (mobile, broadband), apps, tech capabilities (AI, Big Data, IoT) and investments (like Den, Hathway),’ Credit Suisse said in a note.

It said that Facebook’s investment into this entity will further Reliance Industries’ digital initiatives and will help in deleveraging.

’The deal will aid in achieving net debt-free (target) by March 2021. As of December 31, 2019, net debt for the group stands at Rs 1,531 billion ($20.10bn) and with Facebook’s investment, this should put RIL on course to be net debt free by March-2021,’ it said.