Jio, Facebook to continue opposing each other over internet calls, messages
Reliance Industries' telecom arm Jio and social media major Facebook will continue to oppose each other over internet calls and messaging services despite the Rs 43,574-crore investment deal signed between the two companies. Telecom operators, including Reliance Jio, have been demanding "same service same rules" regime which means that mobile applications providing calls and messaging services should also be made to comply with set of rules that are mandatory for mobile service providers.
Mobile app companies providing complimentary calls and messages have opposed the same.
"Both Facebook and Jio are independent companies. We will have our independent views. There will be areas where we will collaborate and there will be areas where we will differ and compete. There is no change in what we think about business. We don't expect it from Facebook either. So no changes or nothing to really comment on those aspects," Reliance Jio head of strategy Anshuman Thakur told PTI.
He was replying to a question that whether there will be change in the stance of the company with Facebook coming on the board of Jio Platforms with 9.9 per cent stake.
Facebook too echoed the same thought that differences will continue on the issue of "same service same rules" between both the companies.
"As excited as we are about collaborating, I think we also expect that there will be areas where we compete. We are showing alignment on opportunity to work together to have positive impact for small businesses particularly. I do agree that there will be areas where we disagree as well," Facebook India vice president and managing director Ajit Mohan said.
Earlier in the day, Facebook announced an investment of USD 5.7 billion (Rs 43,574 crore) to buy a 9.99 per cent stake in the firm that houses Ambani's telecom arm Jio as the social media giant looks to expand presence in its largest market in terms of subscriber base.
"We have made a minority investments in Jio Platforms. We are excited about that canvas. We do think it will be really good for the ecosystem at large. We also expect that there will be areas where we won't have same point of view," Mohan said.
Facebook will get a seat on board on Jio Platforms Ltd, the company it is investing in, along with an observer seat.
Once the investment comes in, Rs 15,000 crore will be retained in Jio Platforms Ltd while the rest will be used to redeem OCPS (optionally convertible preference shares) of Reliance Industries Ltd.
"In that sense, the entire amount does go to reduce the debt of the Group... Jio Platforms Ltd has been valued at an enterprise value of Rs 4.62 lakh crore. The debt in the company is around Rs 40,000 crore. With this investment, Rs 15000 crore will be retained in the company and balance will be used to redeem OCPS investments of RIL in this company," he said.
In October, Jio Platforms transferred most of the debt to its parent firm Reliance Industries Limited.
The net debt of Jio Platforms will correspondingly reduce because of cash which is retained in the company, Thakur said.
"Jio Platforms now has very little debt which mostly pertains to spectrum liability and some commercial business," Thakur said.
Jio Platforms, Reliance Retail and WhatsApp have also entered into a commercial partnership agreement to further accelerate Reliance Retail's new commerce business on the JioMart platform using WhatsApp.
Jio Mart will look at involving local businesses starting with grocery shops before expanding in to other categories like education, health, etc.
RIL Chairman and Managing Director Mukesh Ambani after announcement of the deal said that Jio's digital connectivity platform and Facebook's relationship with the Indian people will offer innovative new solutions to all individuals in the country.
"In the very near future, JioMart-Jio's Digital new commerce platform and Whatsapp will empower nearly 3 crore small Indian Kirana shops to digitally transact with every customer in their neighbourhood. This means all of you can order and get faster delivery of day-to-day items, from nearby local shops. At the same time small kiranas can row their businesses and create new employment opportunities using digital technologies," Ambani said.
Thakur said that the beta version of Jio Mart has already been launched in parts of Mumbai and there is no definite time-line on it becoming completely operational due to uncertainty around the lockdown period.
"We have been working on. Beta phase, in fact we have rolled out to a number of merchants in the new Bombay area and few other places. Things have been impacted because of the lockdown. Trials had to be slowed down. One doesn't know how the lockdown will be revoked. For now beta trials are going and they are going good. This will be across categories. Grocery is one segment where we are providing service to," he said.
When asked about who will handle the payment part of Jio Mart app as the government has not yet allowed Whatsapp to carry out digital payments, Thakur said that the app leverages a system developed by Reliance Retail.
"Jio Mart is Reliance Retail business and Jio mart has its own digital platform on which it is enabling customers and merchants to transact. We will work with Whatsapp to use the Whatsapp platform as a means to bring the merchants and customers more seamlessly," Thakur said.
Facebook is also testing alternate technologies to provide internet services. The company tried to start trials for alternate technologies but could not go ahead because of regulatory reasons.
Mohan declined to comment on testing those alternate technologies on the Jio network but briefly mentioned that 5G technology will be one of the area where both the entities can collaborate.
He said that both the companies are trying to expand the digital ecosystem.
"Why we have invested in Jio is that we are excited about what Jio has done in the last four years and what we can do. If we do bring in that energy we can bring new opportunities. Even without payments we think that the collaboration can bring a lot of value to the people," Mohan said.
He said that the construct of collaboration around Jio Mart is not an exclusive arrangement between the two companies.
The deal signed between the two companies needs only approval of Competition Commission of India but due to uncertainty around lockdown, Thakur said that definite time to close the deal cannot be committed.
"This one comes under the automatic route for FDI. RJIL is the only licence business where 49 per cent is automatic. Only approval that we require is from CCI. We will soon approach them with our application and then whatever time it takes. They will settle the transaction and let us know," he said.
With this agreement, Facebook has become the largest partner of Jio on board.
Jio Platforms houses digital services of the group and Reliance Jio Infocomm Ltd, with 388 million subscribers, is a wholly-owned subsidiary of Jio Platforms.
The Facebook deal is part of value unlocking by RIL to cut debt. RIL has been seeking strategic partnerships across its businesses while targeting to deleverage its balance sheet.
It has been talking to Saudi Aramco for sale of a 20 per cent stake in its oil-to-chemical business for an asking of USD 15 billion. RIL has already tied up with BP Plc for fuel business as it targets to have a debt-free status by next year.
Jio had also been reportedly talking separately to Google but the fate of those discussions is not known.
The latest deal is a win-win for both Facebook and Jio. It would give Facebook deeper access to India, the second largest internet market after China.
Facebook already has 400-plus million Whatsapp users in India and is looking to launch a payment offering. Having a local partner could help it in navigating various regulatory issues, including those related to privacy and local storage.
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