Facebook spends big on India expansion

Facebook’s newly purchased US$5.7bn stake in Indian telco Reliance Jio demonstrates just how far it is prepared to go in expanding its Asian presence and influence. The social media giant is now the largest minority stakeholder in a company estimated to have a subscriber base of 380m people, almost a quarter of India’s population, in a country where Facebook’s WhatsApp messaging service already has around 400m users of its own.

The partnership looks aimed squarely at building and scaling an e-commerce platform serving one of the world’s fastest growing economies. The first stages of the collaboration will see Jio’s e-commerce platform JioMart combined with data gleaned from WhatsApp and Facebook social media to target Indian customers with digital goods and services, with an Indian WhatsApp based payment service also pending approval from the Indian government.

Unlike developed markets believed to be at, or close to, saturation levels, India still has considerable headroom for growth in terms of smartphone penetration and Internet usage according to GSMA Intelligence, which big improvements to mobile network infrastructure brought by fifth generation (5G) rollouts over the next few years are likely to accelerate. Estimates suggest that annual growth in the value of business to consumer e-commerce spend hit 26% in the last 12 months, even before the current global spike in online shopping precipitated by the COVID-19 lockdowns.

The deal could pave the way for further penetration of global tech companies into India (and other Asian markets) through mergers and acquisitions with local companies which help them circumnavigate regulatory barriers. It also helps Jio owner Reliance Industries Limited (RIL – India’s biggest private company) pay off a portion of its substantial US$46bn debt.

Posted by: Martin Courtney

Tags: acquisition   socialmedia   india   payments   ecommerce