[blackwasp]

Social media giant Facebook has picked up a 9.99 per cent stake in Reliance Industries’ Jio Platforms at Rs 43,574 crore ($5.7 billion) making it the largest FDI for minority investment in India. Jio Platforms is a wholly-owned subsidiary of Reliance Industries Limited that works on digital apps, digital ecosystems and the mobile service.

The investment by Facebook put the value of Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value — that is $65.95 billion at a conversion rate of Rs 70 to a Dollar. The first collaboration will happen around the Jio Mart.

Suggesting that the synergy would help WhatsApp become the super-app that is has always wanted to be, the statement added: “One focus of our collaboration with Jio will be creating new ways for people and businesses to operate more effectively in the growing digital economy. For instance, by bringing together JioMart, Jio’s small business initiative, with the power of WhatsApp, we can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience.” WhatsApp is awaiting regulatory approval to enable digital payments for all its 400 million-odd users in India.

Personally I think Facebook wants to touch base with a large part of Indians. Despite having Whatsapp, they haven't been able to get a UPI license which Google has in the form GooglePay. And as they say, the most valuable commodity today is data, which frankly, Facebook is very much interested in.



Source

[Amit_breakfree]

Imagine the kind of data access Facebook will gain from this. Currently Jio is the largest telecom service provider in India with almost 370 million subscribers and a market share of 32%.

We are in dire need of passing and enacting the 'Personal Data Protection Bill 2019' and that too strictly. This should have come out in 2020 (atleast a draft) if not for the Corona scare.

Right now only Section 43A and Section 72A of the Information Technology Act (2000) gives a right to compensation for improper disclosure of personal information. The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 imposes additional requirements on commercial and business entities in India relating to the collection and disclosure of sensitive personal data or information.

We are already bombarded with spam calls, messages, and specifically e-mails. Atleast if the bill becomes an Act and the regulations are passed, we can expect some for of data security.

[turbospooler]

I am wondering if the Net Neutrality debate will be reignited. Facebook is a known offender in terms of privacy as well as throttling.
Be prepared to experience slow speeds while browsing other sites on Jio network in near future.

[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.

I am already exposing a lot of my life to Google baba who I thought was giving me blessings for free. Who knew that the supposed benefactor would demand so much of me in return!

The sheer size of the numbers involved frightens me. The combined might of the two entities will result in a behemoth that will over-shadow most of its competitors; or whatever remains of them.

[digitalnirvana]

This is a win win for Facebook and Jio. Facebook gets a work around our regulatory constraints and we will see some variant of WhatsApp Pay / Jio Pay on WhatsApp soon. Plus access to the h-u-g-e data lakes that Jio has already built, Zuckerberg must be salivating at the thought.

Jio will use WhatsApp along with its JioMart platform for e-commerce of Kirana stores and brick and mortar retailers. This will be a hyper local e commerce model that will take on the likes of Amazon and Flipkart head on, and might probably win. Surely government regulations will support or prefer this mixed offline / online model vs backing Amazon or Walmart as we have already seen instances of. It is good for votebank also as local shops which are under heavy onslaught from the online retailers will be very happy.

And just like that Jio gets to bring all these retailers into their fold without the need to invest in inventory space or warehouses or infrastructure (beyond what they already have through Reliance retail, Reliance frsh, Reliance digital and the likes)

Must say MDA has got this deal spot on. He is a true visionary.

[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.

[akshaymahajan]

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.

I doubt this is about the money. Its about the synergies and the potential these two companies can have together.

I would be scared of even thinking of what these two companies can pull off together.

[anandhsub]

It looks like Facebook and Jio want to combine and make Whatsapp the WeChat of India.

Definitely not just for financial purposes although a lot of this investment will go towards reducing Jio's debt.

[karan0009]

I can see the below benefits that Facebook will have with this deal.

1) Data - Access to millions of user data which Jio has.
2) IPO - If Jio is listed in 2020 as rumored earlier, Facebook can earn some return in the investment.
3) UPI License - Reliance group can definitely help them to get UPI license on priority.

[Rachit.K.Dogra]

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.

Originally Posted by akshaymahajan

I doubt this is about the money. Its about the synergies and the potential these two companies can have together.

I would be scared of even thinking of what these two companies can pull off together.

I am not a Subject Matter Expert on this, But Jio was created with an investment of 1.5 Lakh Crores. Quite a bit of it is loan.

Jio by now would have expected to demolish everybody and be the only remaining player, which didn't happen. Airtel is very much still alive.

Although Jio claims to be making profits, I being a very simple man can make out that its not possible. Consider what they charge and the Interest of 90,000 Crore bank loan, how can they be showing profits?

I was speaking somebody from the industry recently and I was told that Jio was not showing Interest paid as expenses or something and hence was showing profits for which their shareholder questioned and now they are having to report it correctly, which means they have to show losses.

This is very much about money. Jio wants to offload some of the loan from it head.

I don't as such have any evidences around this, but this is what I think from some of the discussions I have had with people.

Rachit

[karan0009]

Originally Posted by Rachit.K.Dogra

I am not a Subject Matter Expert on this, But Jio was created with an investment of 1.5 Lakh Crores. Quite a bit of it is loan.

Jio by now would have expected to demolish everybody and be the only remaining player, which didn't happen. Airtel is very much still alive.

Although Jio claims to be making profits, I being a very simple man can make out that its not possible. Consider what they charge and the Interest of 90,000 Crore bank loan, how can they be showing profits?

Bank loan is a liability which sits on the Balance Sheet & not in Profit & Loss statement. Only interest paid is covered in the P&L as an expense. So even if Jio has 90,000 crore worth of bank loan, it can still be profitable based on the revenue (-) all the expenses including interest.

P.S - I am a tax professional.

[GTO]

About $6 billion USD which is a chunk, but not that much for a company with a market cap of $500+ billion. Jio is after all the world's largest telecom operator. 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. Whatever big project Facebook tried to push in India (WhatsApp payments, free internet...) got shot down or delayed. Tying up with the biggest name in the country has got to help getting some of its initiatives cleared.

[motorworks]

I had a 4.5 year stint with AJIO, the clothing and apparel site of RIL, and all thru we kept waiting for some push from the corporate office to make the site bigger and chase after Myntra. But it never happened, possibly because no one knew what the Ambanis were thinking. They refused the offer to buy Jabong, were even in initial discussions to buy Flipkart, and so many such moves that never happened. The speculation was that Alibaba was keen on investing in the E-commerce venture of RIL, but nothing came off there as well. So finally, something happens and I think this is better than anything that RIL could have done earlier. They have struck a deal with Facebook, gives them access to unlimited customers thru face book as well as Whatsapp. The strategy would be to build a super app where everything under the sun would be possible from shopping to movie tickets to even airline tickets etc. And RIL gains big time here, because Facebook is not Chinese, they dont have vested interest in Retail, so RIL is always in control of what it wants to do. For Facebook, well its finally monetising whatsapp!

[adithya.kp]

I think we can interpret in two ways.

1 a. They are able to raise 43,574 crore at a valuation of 4.3 lac crore even in this weak market. (For reference, Bharti is valued at 2.73 lac crore)
1 b. Global companies are willing to invest in India.

2. They have to resort to use equity dilution (Instead of internal accrual ) for debt reduction. There was a news about stake sale to Aramco. I dont know how it unfolded. The total group level debt is well over 4 lac core. The debt/equity ratio of 0.72 doesn't look optically alarming. But I think most of the equity is in the form of capex. The liquid cash is only 12k crore.
On the other hand, facebook has a net cash of about 45 billion. So they can easily afford 5.7 billion.

[ash22]

Originally Posted by GTO

About $6 billion USD which is a chunk, but not that much for a company with a market cap of $500+ billion. Jio is after all the world's largest telecom operator. 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. Whatever big project Facebook tried to push in India (WhatsApp payments, free internet...) got shot down or delayed. Tying up with the biggest name in the country has got to help getting some of its initiatives cleared.

That is ~$6 billion for ~10% stake. In fact, that $6 billion is a much more accurate figure than Rs. 43, 574 crores, because the whole point of this transaction is to get that vitally needed almighty US dollar to the heavily dollar-indebted corporate India.

The simple reason is that the Reliance group, like so many other corporate groups in India, had borrowed heavily in US dollars to fund its expansion plans in the past, including the much applauded Jio network.

Reliance built an awesome utility, but there was one hitch in their plan: Almost the entire network infrastructure, all the base stations, the optical fiber networks, even perhaps the diesel backup generators, all of them were imported. So Reliance simply used its borrowing power and borrowed in US dollars to pay for all that, and the interest rates were low too.

There was one serious problem: The debts were contracted when the rupee was much stronger several years ago, but now the rupee is down, and Reliance has revenue entirely in rupees, and they have to use their depreciating rupee revenues to repay their dollar debt, oops ...

DOT