Google is in advanced talks to buy a stake in Reliance Industries’ telecom and digital unit Jio Platforms, people aware of the discussions said. If a deal is finalised, this would be a rare instance of two FANG - Facebook, Apple, Netflix, Google - companies investing in one firm, they said. Facebook had kicked off a series of investments in Jio in April.
“Google could be the next investor in Jio Platforms. A deal could be announced shortly,” a person familiar with the matter told ET.
According to a Bloomberg report, Google has been discussing an investment of about $4 billion (₹30,000 crore) in Jio. That could net the company a 5-6% stake in Jio Platforms, given the last 12 stake sales to 11 investors pegged Jio Platforms’ equity value at ₹4.91 lakh crore. Facebook, as the first investor in Jio Platforms, bought a 9.99% stake at a lower valuation of ₹4.62 lakh crore.
Jio and Alphabet Inc-owned Google didn’t respond to queries. Google said Monday that it planned to invest $10 billion in India over five to seven years.
The company said it intends to launch new products and services, increase internet penetration and leverage technology for social causes such as health, education and agriculture. A deal with Jio Platforms could mark the beginning of such partnerships in India, experts said.
Sundar Pichai, CEO of Alphabet and Google, didn’t confirm or deny reports about interest in Jio Platforms, in an interview on Monday. Google was reported to be in talks with RIL for an investment in Jio before the deal with Facebook was announced.
An announcement about the investment could come as early as Wednesday at RIL’s annual general meeting. Bloomberg had said such a deal could be made public in the next few weeks. Jio Platforms houses RIL’s telecom business under Reliance Jio Infocomm.
RIL’s telecom and digital unit, which mirrors the Alphabet-Google structure, has got investments worth about Rs. 1.18 lakh crore ($15.7 billion) in just over two months for a total stake of about 25.24%. On Monday, US chipmaker Qualcomm became the latest to join a slew of technology-focussed investors acquiring a slice of Jio. India is a key market for the likes of Google and Facebook. The number of internet users in India is expected to rise to about 850 million in 2022, according to PwC, up from 450 million in 2017. Google dominates search, video, maps and email in India. Nine out of 10 smartphones sold in India come with Google’s Android OS.
RIL has been making efforts to position Jio Platforms and its telecom venture Reliance Jio Infocomm as more digital, consumer technology companies, with experts saying key investors it has brought on board underline that strategy.
RIL “has successfully convinced investors of the Big India digital story and the potential of Jio Platforms. The onus will lie on them to deliver going forward”, said Sanjay Kapoor, former Bharti Airtel CEO for India. How these investments and partnerships translate in terms of products and solutions for Jio customers is yet to be seen, he said. “Will these be exclusive products and services or will these be priority launches with Jio? What do these partnerships mean for other telecom operators such as Airtel and Vodafone in their relationship with Qualcomm, Facebook, etc?”
The funds have helped RIL pare debt. The oil-to-retail-telecom conglomerate said in June that it became a debt-free company after the first 11 back-to-back investments in Jio Platforms and a Rs 53,124-crore rights issue.
Credit Suisse said Jio is in the initial stages of monetising its potential beyond the wireless service.
“Jio has competitive advantages with its full stack of services in many verticals like online health and education,” the equity research firm in an internal note. Jio had started the monetising exercise through advertisements on MyJio and JioSaavn, it said.
The firm estimated that Jio Platforms’ enterprise value would rise to $88.5 billion, owing to the growth expected from many of its non-wireless businesses, which include health, education, agri-tech, home broadband, enterprise services, Internet of Things (IoT) and Jio’s app suite. But the house didn’t assign any timelines.
“We now value Jio’s non-wireless verticals... given the significant progress in many of them and the possibility of aggressive customer ramp-up enabled by the recent significant deleveraging ($23.7 billion). We assign an EV of $17.5 billion for non-wireless verticals, increase Jio’s EV to $88.5 billion,” said the brokerage firm.
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