A note on the Facebook-Jio investment

Mukesh Ambani

Last week I wrote about Reliance Jio and Facebook, from the point of view of what is in it for each player, if a transaction goes through. If you haven’t read that, I suggest you do to get context.

Earlier this morning the transaction was announced. From Jio’s media release:

Reliance Industries Limited, Jio Platforms Limited and Facebook Inc today announced the signing of binding agreements for an investment of Rs 43,574 crore by Facebook into Jio Platforms. This investment by Facebook values Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value ($65.95 billion), assuming a conversion rate of Rs 70 to a US dollar. Facebook’s investment will translate into a 9.99% equity stake in Jio Platforms on a fully diluted basis.

Money coming in is good for Reliance, and will help reduce its indebtedness. Something that’s been a lingering problem for the company.

Reliance will use Rs 28,574 crore from the Rs 43,574 crore incoming to pay debts. The remaining Rs 15,000 crore will be left in Jio Platforms. For now.

In return for Facebook’s minority investment, the company gets a seat on the Board of Reliance Platforms, and another Board observer seat. This is interesting, and should be Ajit Mohan’s ticket to oversee what exactly will a partnership between Jio and Facebook amount to beyond the financial investment. Mohan is the managing director of Facebook in India, and reports directly to company headquarters in Menlo Park. Just 18 months into the job, he was earlier the CEO of Hotstar, India’s largest video streaming platform in terms of paying subscribers.

Which also brings me to outcomes.

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