RUMOURS OF INDIA’S debt-sodden firms receiving a cash infusion from a foreign buyer swirl regularly, but rarely become reality. With the country in lockdown and oil prices crashing, worries have grown that the most touted such investment—the $15bn purchase of 20% of Reliance Industries’ refining arm by Saudi Aramco, the kingdom’s oil colossus—may be delayed or cancelled. That deal had been seen as a way to ease the pressure from loans used to build Reliance’s Jio telecoms arm: concerns that it was under strain certainly did not help as Reliance’s share price tumbled by more than 40% between mid-February and mid-March amid pandemic panic. But all is not lost for the Indian conglomerate—thanks to Mark Zuckerberg.
On April 22nd Facebook agreed to buy 9.9% of Jio for $5.7bn. With the swipe of a pen, Reliance has a new financial cushion and, possibly, a partner for transforming Indian business. For Mr Zuckerberg’s social network, the bet is one-tenth of its rapidly expanding pool of cash, placed on an intriguing market.
The deal’s value lies in the crossover between the hold each partner has on aspects of India. Since its launch in 2016 Jio has crushed domestic competition in mobile telecoms with ultra-low prices. With 388m users, and funds from Facebook, it is much better placed than rivals to invest in 5G technology....
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