Facebook mulls acquisition of Reliance Jio stake – report

News Wireless India 27 MAR 2020
Facebook mulls acquisition of Reliance Jio stake – report
Facebook seeks to acquire a multibillion-dollar stake in Reliance Jio. The Indian operator’s mobile internet service has attracted nearly 370 million Indian customers in just three years, The Financial Times reports, citing two unnamed sources with knowledge of the discussions. According to one of these sources, Facebook nearly signed a preliminary deal for a 10 percent share in Jio, but the deal timetable was negatively impacted by the global lockdowns caused by the coronavirus outbreak.

Mukesh Ambani's Reliance launched mobile operator Jio in India in 2016. Analysts at Bernstein valued Jio at more than USD 60 billion.

According to another source, Google also held separate talks with Reliance Jio. Discussions came up after Microsoft announced in 2019 plans to partner with Jio to provide cloud computing services to business customers. India has emerged as a vital market for Facebook and its WhatsApp messaging platform. 

In December 2019, Reliance Industries confirmed a deal to sell the towers network of its mobile unit Jio to Brookfield Infrastructure Partners. After a preliminary agreement in June 2019, the companies announced a definitive contract for the acquisition of approximately 130,000 communication towers by Brookfield for USD 3.7 billion (INR 252.15 billion). Jio is an anchor tenant of the tower portfolio under a 30-year Master Services Agreement. Sam Pollock, CEO of Brookfield Infrastructure, said the towers have so far only carried Jio equipment but there is potential for co-location of other operators’ kit. An expansion is expected to bring the portfolio to approximately 175,000 towers.

In October 2019, Reliance Industries announced plans to separate its telecom business Reliance Jio Infocomm into a new company to develop digital services. The creation of the new subsidiary will also lead to a restructuring of debt generated from growing Jio.  The new subsidiary will acquire all of Reliance's equity of INR 650 billion in Jio. In addition, Reliance will take over INR 1.08 trillion of Jio's debt. Jio will pay for the debt transfer by issuing new optionally convertible shares to its new parent company, the subsidiary of Reliance Industries. 

As a result of the transactions, Jio will become "virtually net debt free" by 31 March 2020, excluding its spectrum obligations, the company said. This will free it up to invest more in its digital platforms and new ventures as well as make it an attractive investment proposition for both strategic and financial investors, Reliance said. The company added it's already received "strong interest" from potential partners. 


Categories:

Mobile

Companies:

Microsoft,  Google,  Reliance Jio

Countries:

India

Tags:

Wholesale, M&A buyouts & divestments

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