[landcruiser123]

Facebook already has many indirect users through WhatsApp. I’ll not be surprised if Jio starts dialing up their value added service offerings with End-to-End services like Payments, Amazon Prime, Amazon Cloud drive, and shopping(Through existing Reliance retail channels.) With access to FB and WhatsApp, guess their advertising strategy is sorted.

This might be the start of something like WeChat in China.

[1.2TSI7DSG]

I was tracking the deal and loved the outcome. Whoever was the guy behind the deal possibly pulled off a deal of the generation.

Jio has already declared interest in Ecom, Streaming. What they need is a strong platform. The only product company which did not have a strong Ecom/Streaming was Facebook. Facebook now has millions of subscribers ready for their e-com & streaming services. So they will build the platform(and content hopefully), Jio will provide connections & subscriber base.

I had discussed with a few friends that if Jio wanted to enter e-com & streaming, they are better off with partnering with someone who has tech expertise. Now they have partnered with someone who the largest capability to build a platform. True to Mukesh Ambani's style of business - I will be no 1 or No 2, no 3 onwards I will exit if I cant become no 1/no 2 in a couple of years!!

Just waiting for HBR, Stanford IIMs, ISB to write a case on this. will be extremely interesting one to solve and learn.

[kozhissery]

Originally Posted by GTO

Ambani & Zuckerberg usually think 10 years into the future, so I have no clue on what their ideas are from this deal, but in the near future at least, Facebook would be looking at getting some of their initiatives off the ground.

From the statement, I feel they are planning to head right now (cache on Covid fear) as it has been mentioned that they are going to target local grocery shops.



Ref: The Hindu - 23-Apr-2020 Edition

[ValarMorghulis]

Well first of all, I don't think FB will have access to Jio users with a mere 10% stake. Ambani senior knows better and has been usually a decade ahead of others in terms of seeing the next revolution. He's been on the right side of history and economics twice now (mobile phones and data) revolutionizing both industries.
I like 1.2TSI7DSG idea that this is about streaming service, but I also feel there is more. A payment option on Whatsapp with AJIO, JioPay, JioTV, JioCinema, JioNews, etc. on it as prime portals to disseminate other media as well.

The trickiest part is: If Whatsapp is the backbone, FB can easily replace Jio apps once Whatsapp becomes the defacto WeChat. After all FB is no saint (remember FB/ Insta copying Snapchat like there is no tomorrow)?
Interesting times ahead.

[fache89]

Reliance was determined to become debt neutral in a couple of years. They could foresee a recession. Thus, they signed a massive $15B deal with Saudi Aramco which could have helped offset all that massive debt at Jio. But, government had other plans. The government literally pulled the handbrake.
https://economictimes.indiatimes.com...7.cms?from=mdr

With deal scuttled and Oil revenues taking a hit, it was time to look for alternatives. If you can't trade Oil, then you can always trade data. Thus, Jio sent a friend request to Facebook , they approved and Markets liked and shared.

It is not merely promoting Kirana stores and competing against the likes of Amazon and Flipkart. It is something more sinister. After Supreme court ruling upheld the validity of cryptocurrencies, Facebook was looking for more avenues to mainstream their Cryptocurrency "Libra". Jio after all has one of the largest 4G network.

I reached this conclusion because I wondered why did Facebook not buy a stake in Vodafone Idea. They could have got it at quite a bargain. However, it dawned upon me that Vodafone group had already pulled out of Libra. So, in order to mainstream their cryptocurrency what better place to start with Jio in India. For Jio, they are in a hurry to neutralize debt.

[digitalnirvana]

Libra is dead to be fair and it will never fly in India where the RBI will not allow any non sovereign currency.

What they are most likely to do is have a WhatsApp / Jio Pay integration with UPI. Like AliPay or WeChat Pay.

This deal is way beyond the introduction of a new payment platform. Jio isn't just targeting paytm or Google pay. Make no mistake, the real target is Amazon.

[vsrivatsa]

Facebook-Reliance Jio: Competition panel needs to clear deal : URL

Given the size of the transaction, pegged at Rs 43,574 crore, Facebook’s deal with Reliance Jio will need to be cleared by anti-trust watchdog Competition-Commission of India (CCI), which will assess if the partnership will adversely impact the market — both in the telecom and retail spheres

[Slick]

I am aware that Jio already has a mobile app that is used by Kirana shops to order stuff from Reliance Retail. Some people from my org have worked on the app.

The goods will be delivered to the Kirana shop or the customer's doorstep.

The Kirana shop benefits by investing less capital and ordering what is required. He gets a percentage for much lesser risk while also maintaining his customerbase.

Reliance gets guaranteed business from a whole lot of Kirana shops.

I am not sure what value Facebook adds to this and gets in return?

Technological ? Jio already has a pretty good & functioning app.

Reach ? Possibly, Facebook might help guide prospective customers to the local Kirana shops by advertising offers on their app/site.

These are the benefits that Facebook adds to Jio, what does Facebook get in return?
Is this a threat to net neutrality ?

- Slick

[alpha1]

Originally Posted by safari_lover

At the risk of sounding jingoistic, I find it odd (disappointing even) that even large corporate houses like Reliance cannot sustain without money from overseas. Can't they raise the capital internally.

Make of it what you will but It looks like all our telecom and entertainment companies (all consumer facing), will soon be owned by foreigners.

On loans:
1) RIL already is sitting on a borrowing of Rs 1,18,098 crores! ($17 billion)
https://www.ril.com/ar2018-19/ril-an...eport-2019.pdf
And if we include the figures of their subsidiaries that figure balloons to Rs 2,07,506 crores ($30 billion)

2) Money from abroad fetches lower interest cost. Yes the forex rates matter, but what if I tell you that most of the profits that RIL makes is from trading in crude oil, and exports of intermediate as well as finished refining & petrochemical products? They become immune to fluctuating FX rates.

On equity/ownership:
The way of life is that the ownership goes where money exists, and the one who has most money will be able to own most assets, which in turn will allow him to add more money. Its a vicious circle from very very long ago, being disturbed only by the technology. In the last technological disruption (industrial revolution) this went to Europeans and taken forward by US (modern technologies).



On the thread topic
Jio's app have not really taken off the way MDA would've wanted. FB and whatsapp are the kings in their respective "markets" in India. (FB = social media, individual preferences, tastes, social trends, individual location etc, and Whatsapp = communication)
RIL can easily incorporate all the local kirana's in their supply chain distribution network, offering the local last mile connectivity.
Marketing and transactions can be done via FB and Whatsapp.

I am sure that in coming future we will see some regulations that will make Amazon and other e-tailers life difficult.

Also on other note, the falling crude oil prices must've hurt RIL's financial planning.
The GRM spread reduces, cracking margins decrease, and Covid on top (reducing world's aggregate demand).
Something must be done to improve the cash flow situation!

[anumod]

Originally Posted by dailydriver

I have consciously stayed off and away from both Facebook and Jio, primarily because I trust them very very less. Its perhaps time to ditch, or at least minimise the use of, WhatsApp too.

Same here and wanted to add one more point. When Reliance launched the 449 CDMA phone way back in early 2000. Lot many customers got cheated with inflated bills too. And if you see the journey of Reliance,(Looking from Dhirubai Ambani times), they have taken short cuts always.

[psmenon]

I always saw Jio and their platform as a threat to privacy, when they launched the network I did stand in line to get a sim due to peer pressure but I was very unhappy with the way they collected personal details. Jio was never my primary connection and I destroyed the sim after a month or so, I do not use FB or IG for any social reasons and the amount of data they had with them when I closed my account took about 16gb of my HDD space.

Now with these investments coming and government regulations favoring Jio, this is going to be a monopoly for sure - FB loves this and they do want to have a piece of this cake from India.

Vodafone and Idea is almost dead - partly due to their inefficiency and lack of customer centric initiatives, Airtel is hanging around just because nostalgia and customer service(to an extent), let good prevail.

[urajkumar]

I think some of you highlighted this in the thread earlier, the plan is to help make whatapp like wechat in china. Jio has what whatapp does not - Payment integration, retail market strength & access to online market place.

The whole local grocery store is a brilliant idea for example - You can order groceries or vegetables online using facebook / whatapp, it goes to your local store-owner who is going to probably deliver it on the same day thereby killing Amazon/Big-basket. Now they will eventually arm-twist the local store-owner to buy lot of stuff from them whole-sale when they have the data & customer base thereby eventually controlling the entire market-space from wholesale to retail - this without investing on a huge manpower & logistics network as the local stores will do it for them. All while constantly reminding you that you are helping your local store-owner survive instead of a international online app - will work all the more post COVID scenario. They have been signing up store-owners for last 1.5 years and already have a huge list with them.

The long term plan is to ensure that reliance is part & parcel of every aspect of your life in some direct or indirect way eventually. Nothing better than a Facebook-JIO, actually more Whatapp-JIO tie-up to kick things off.

[srishiva]

So, we wanted to do something like the Chinese WeChat. But yet we are doing it through someone from outside. Maybe they didnt want to create a competitor to WhatsApp. But they had decided to fight FliKart and Amazon.

I think Mukesh Ambani is more dedicated to reducing the debt and looking for easier ways to operate. But still the Japanese/Koreans and then Chinese have integrated various things for online apps successfully

[CarNerd]

I don't know much about economics but as per a new law or whatever, Chinese companies (and those that share a land border with India) can't invest privately in Indian companies whereas others can buy whatever they like. This was done as soon as China bought 1% of HDFC shares. What's the logic behind this? Is it just because Chinese are considered as hostile or is it something else?

[rrsteer]

Mukesh Ambani's video statement on the stake sale to FB:

https://www.youtube.com/watch?v=XYGMCKArG8c

The only worthwhile snippet was, Reliance creating a Jio Mart for small traders and later for farmers and entrepreneurs, where payments will be powered by Whatsapp. But I still am unable to comprehend the need for Jio to sell a stake to FB for this purpose. What does a stake sale achieve that a strategic partnership couldn't have? Are they wanting to create a closed ecosystem? - which sort of goes against the norm.

My first reaction was Reliance reducing its debt burden, especially so, given the prognosis for the economy- both domestic and global.