Narendra Modi, India’s prime minister, speaks as Mark Zuckerberg, chief executive officer of Facebook, listens during a town hall meeting at Facebook headquarters in Menlo Park, California.
David Paul Morris |Bloomberg | Getty Images
Facebook has taken a huge stake in the digital arm of a massive Indian conglomerate, as the U.S. technology giant makes a bigger push into what it sees as one of its biggest growth markets.
The social network made a $5.7 billion investment in Jio Platforms Limited, owned by Reliance Industries which is run by billionaire Mukesh Ambani.
Jio Platforms has a number of brands under it including its telecommunications business Reliance Jio which has grown rapidly thanks to competitive pricing to become the number one mobile carrier in India by revenue and subscriber base.
“This investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country,” Facebook said in a blog post on Tuesday.
The investment gives Facebook a 9.99% stake in Jio Platforms and gives it a pre-money enterprise value of $65.95 billion.
India is key for Facebook’s WhatsApp messaging service which has over 400 million users in the country.
Facebook said it will work with Jio to create “new ways for people and businesses to operate more effectively in the growing digital economy.”
This could include bringing together JioMart, Jio’s small business initiative and WhatsApp to connect people to businesses and shops. The move is timely as Facebook is gearing to launch a payments feature for WhatsApp in India.
The investment could be key for a number of reasons including access to Jio Platforms’ more than 380 million user base as well as having the political backing of Ambani.
Facebook has been trying various means to get a strong foothold in the Indian market over the past few years but it has not always been successful. In 2016, Indian regulators blocked a Facebook service called “Free Basics” which looked to give free access to popular web services such as Wikipedia.
The premise was that some sites would not charge users data costs. But that, critics said, went against the idea of “net neutrality” — the idea that all sites should be treated equally when it comes to data.
Facebook shares were up 2.5% in after-hours trade.