(Correction: corrects headline)
By Sarwar Kashani
New Delhi, Apr 22 (efe-epa).- Facebook on Wednesday announced it would buy a nearly 10 percent stake worth $5.7 billion in the tech subsidiary of India’s Reliance Industries as the social media giant looks to leverage its massive WhatsApp user base to launch digital payment services in a country that has over 60 million small businesses.
The investment to buy a 9.99 percent stake in Jio Platforms on a fully diluted basis will make Facebook the largest minority shareholder in the Indian multinational conglomerate’s digital arm, now valued at nearly $66 billion.
However, the deal is subject to regulatory and other customary approvals by the authorities.
Facebook founder CEO Mark Zuckerberg said in a post that India, home to “the largest communities on Facebook and WhatsApp” was in the middle of a major digital transformation.
“Organizations like Jio have played a big part in getting hundreds of millions of Indian people and small businesses online,” he said.
Zuckerberg emphasized that small businesses were now at the core of every economy and needed tech support to thrive.
“India has more than 60 million small businesses and millions of people rely on them for jobs. (…) Many of these entrepreneurs need digital tools they can rely on to find and communicate with customers.”
The messaging app has been seeking approval to roll out its digital payment service in India.
The app’s digital payment feature to transfer money has already been tested and is ready to be rolled out with Jio’s new commerce platform, JioMart.
“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,” Facebook’s chief revenue officer David Fischer and vice president for India Ajit Mohan said in a bylined blog post.
“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.”
With 400 million users, WhatsApp’s base in India is comparable to Jio’s outreach with over 388 million subscribers in a country with over 560 million citizens connected to the internet through smartphones.
The number of smartphone users is likely to reach 860 million by 2022, according to a 2019 study by Assocham, an apex trade body in India.
“Our goal with this investment is to enable new opportunities for businesses of all sizes, but especially for small businesses across India and create new and exciting digital ecosystems that will empower, enrich and uplift the lives of all 1.3 billion Indians,” Reliance said in a media release.
The statement said the focus of the collaboration would be “India’s 60 million micro-small and medium businesses, 120 million farmers and 30 million small merchants”.
Mukesh Ambani, the head of Reliance Industries, said his conglomerate was “humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India for the benefit of all Indians”.
“The partnership will surely make an important contribution to this transformation.” EFE-EPA