Facebook is in talks to buy a multibillion-dollar stake in Indian telecommunications company Reliance Jio, but the deal’s timetable has been stalled due to the coronavirus-triggered lockdown, the Financial Times (FT) reported on Tuesday (March 24), citing sources.
The social media giant aims to leverage Reliance Jio to expand its presence in the Indian digital market as the country experiences a digital transformation. The announcement of the deal was supposed to align with India’s fiscal year-end on March 31.
Reliance Jio, a wholly-owned subsidiary of Reliance Industries, has 370 million of its discount mobile internet service. The wireless carrier, which was founded by multibillionaire Mukesh Ambani in 2016, has shown that it can compete with U.S. tech firms in the Indian market. The company has a valuation that tops $60 billion, according to analysts at Bernstein.
Facebook is looking to close a deal with Reliance Jio for a 10 percent share, one of the sources told FT. If the deal happens, it will strengthen Facebook’s position in the Indian market. Its WhatsApp messaging platform has 400 million users and is on the verge of introducing a payments service.
Google has also been talking with Reliance Jio about a deal, one of the sources said. In August of 2019, Microsoft formed a collaboration with Jio to offer the Azure cloud computing platform to big enterprises.
India replaced the U.S. in 2019 as the second-biggest smartphone market after China, according to data from Counterpoint Research.
Silicon Valley has had a tough time penetrating the Indian market because of the government’s additional restrictions on foreign firms. The country currently has a Personal Data Protection Bill on the table.
A deal with Facebook would help Reliance meets its goal of reducing its net debt burden to zero by March 2021.
In January, Reliance Jio upped its competitive edge when it entered the Unified Payments Interface (UPI) space. Jio already has a wallet service called JioMoney.