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Facebook's $5.7bn bet on India's richest man Mukesh Ambani

BBC Technology 22 Apr 2020 03:02
The logo of social media giant Facebook is seen on a screen of a phone next to a red illustration of world and financial markets.Image copyright Getty Images

Facebook has said it is investing $5.7bn (£4.6bn) in cut-price Indian mobile internet company Reliance Jio, which is owned by the country's richest person Mukesh Ambani.

The deal makes the social network the largest minority shareholder in the telecoms unit of Reliance Industries, with a 9.99% stake.

It gives Facebook a major foothold in India, where its WhatsApp chat service has 400m users and is about to launch a payments service.

"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 statement.

Facebook also said that it plans to focus on the collaboration between WhatsApp and Reliance's e-commerce venture JioMart to enable people to connect with businesses, shops and purchase products.

In February this year WhatsApp Pay was granted permission by Indian authorities to start a phased roll-out, two years after the start of a trial version of the service.

By Nikhil Inamdar, BBC India business reporter

With a presence across a suite of services such as mobile telephony, live TV, music streaming and payments, Facebook will be looking to drive synergies across services and further consolidate its position in India.

Mr Ambani has confirmed that his digital new commerce platform Jio Mart will collaborate with Whatsapp in the near future to help "mom and pop" shops transact digitally with their customers in the neighbourhood.

India is seen as a key market for the growth of both Facebook and its WhatsApp messaging platform. The number of internet users in the world's largest democracy will grow to around 850m in 2022, according to consultancy firm PwC.

The deals come as the Indian market has become increasingly difficult for American companies to get into, as the government has imposed new restrictions to overseas businesses operating there.

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