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FACEBOOK’S $5.7 BILLION BET ON INDIA THROUGH JIO - PART 1

     
Facebook has spent $5.7 billion for a 9.99 percent stake in Jio Platforms, the tech subsidiary of India’s Reliance Industries. It was the classic Silicon Valley bet: spend money up front, then make it up on volume because of a superior cost structure enabled by the zero-margin nature of technology. Reserve Bank of India’s 2018 directive, which mandated the local storage of all payments data, various entities in the Indian government have introduced a slew of data localization policies mandating some form of data localization. Facebook, desperate to avoid the onerous compliance costs of data localization, left no stones unturned in getting the Indian government to renege on their data localization mandate. 

The investment—One of the single largest in Facebook’s history—is a giant bet on India’s online growth. India has long been a major growth market for Facebook, one that it has yet to successfully monetize. 400 million WhatsApp users—platform owned by Facebook that has more users in India than in any other country. The investment increases Facebook's exposure to India's massive SME market, and potentially opens a major new opportunity for those companies involved in the Telecom Infra Project (TIP), in which Facebook plays a pivotal role.


What is TIP??

Telecom Infra Project (TIP) was formed in 2016 as an engineering-focused, collaborative methodology for building and deploying global telecom network infrastructure, with the goal of enabling global access for all. One of Jio Platforms' strategic objectives is to use its network, cloud, and software assets to improve access to cutting-edge connectivity and online services for Indian consumers and businesses – particularly SMEs, so-called micro-businesses, and farmers. There are more than 60 million SMEs, 30 million small merchants, and 120 million farmers across India.  They account for the majority of jobs in the country and form the heart and soul of rural and urban communities. Their collaboration with Jio will be creating new ways for people and businesses to operate more effectively in the growing digital economy.
 
TIP could also be a significant beneficiary of this deal.  Jio provides for an aggressive, 4G-only deployment with disruptive pricing while forging swiftly on fibre deployment across the nation, in parallel. Jio Platforms encompasses not just fixed and mobile networks, but everything that goes with them including services, apps, content, AI, devices, and cloud. Jio offers mobile Internet for nearly free and tries to make money by up-selling subscriptions to their own versions of Spotify and Netflix. 

Is there still room for Facebook to grow?? The answer is a BIG YES and here is how… 
 
At least half a billion Indians remain offline. Partnering with Jio and its influential owners may help the company navigate an increasingly protectionist Indian market. Facebook has previously been rebuffed by Indian regulators—when it tried to launch a free, gated version of the internet in 2016. Jio, now the biggest cellular internet provider in India, is a valuable friend for Facebook to have in its corner. Jio’s success in India has raised a lot of eyebrows but the biggest moment came when Mukesh Ambani invested $33 billion to construct a nationwide 4G broadband service network. This allowed Jio to offer cheaper data services and free domestic calling to its subscribers. Reliance Jio has the highest ARPU (Average Revenue Per User) in the industry.

TO BE CONTINUED….

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