The Reliance Jio and the Facebook deal is probably one of the most universally positive bits of news to emerge during the COVID-19 lockdown in India. While the national economy is flagging slowly, this deal is set to pump an estimated 8 percent surge in Reliance stocks on the National Stock Exchange. Experts are hailing this as an excellent move for both partners in the agreement. They have outlined a few highlights for investors to consider. Here they are:
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5 Highlights from the Reliance Jio-Facebook Deal
1. A Win-Win Situation for Everyone
Facebook currently caters to one of the most populous online demographics in the world. Using Jio’s 388 million clients, it can reach further into the growing Indian market. At the same time, Jio also will be able to use Whatsapp and Facebook’s chat features for better client outreach and involvement.
2. Jio Gets Bigger for Trade
Jio will get a major push in the stock market from this deal. According to experts, the Facebook assets with Jio are valued at $65.95 billion, assuming a conversion rate of Rs 70 to a US Dollar. It will give Facebook a 9.99% stake in Jio moving forward when considered by way of complete liquidity.
3. Jio Gets Debt Mitigation
Jio has been making swift moves in the market of late. It has acquired a client base of 400 million in just the past four years. This growth in the market has also come at the cost of outstanding company debt. In stark numbers, Jio’s $45bn investments in company development have netted it a $30 billion debt.
However, this new Facebook deal injects new technologies and allows the company to leverage a far broader network for more aggressive moves. Also, this comes at a relatively lower cost than would have been possible with solo operations.
4. Moving Bullish on Technology
Jio has been striving to be the forerunner in technology introductions in India. It is investing in nationwide broadband connectivity, smart devices, cloud and edge computing, big data analytics, artificial intelligence, IoT, AR/MR, and Blockchain.
This new deal with Facebook will further the development process and enable Jio to introduce these technologies under its brand name faster than before. Further, it will solidify Jio’s online customer acquisition protocols across multiple channels like retail, telecom, and payments.
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5. Stiff Competition to Bharti Airtel and Vodafone
In light of this idea, all telecom companies in India, including Airtel and Vodafone, will be looking to equalize Jio’s forward momentum. They will step up their efforts, and this will benefit the whole national market in its entirety.
What Can We Expect from Jio and Facebook Moving Forward?
This deal is probably a milestone agreement between the two companies. Facebook wants to tap into the massive economic powerhouse that is the Indian market, and Jio can provide for this through its strong customer base and essential infrastructure. Overall, this deal can positively leverage the best of technology, physical resource, and market potential for all parties involved.
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