Facebook and Ambani Can Be Happy Together
Covid-19 may open up digital retail for Indian tycoon’s telecom play to really pay off.
Going “phygital” may be the biggest appeal for Mark Zuckerberg.
Photographer: Avishek Das/SOPA/Light Rocket/Getty Images
When naming his telecom foray in 2016, Mukesh Ambani chose the mirror image of OIL, the commodity that has made him India’s richest man. In hindsight, Jio was a good choice. The week that oil prices turned negative, the refining tycoon won a $5.7 billion investment from Facebook Inc. for his digital assets, Jio Platforms Ltd. Like his wordplay, the performance has proven the opposite of the original.
The 10% stake values the business at a 47% premium over the $45 billion estimated last year by CLSA Ltd. That appears rich, considering that Ambani has yet to demonstrate how he’s going to make money from his 400 million telco customers — roughly the same number that Mark Zuckerberg has in India for his three main offerings: Facebook, WhatsApp and Instagram.
But as we’ve said before, Ambani’s strategy has three connected elements: carriage, content and commerce. Jio charges practically nothing for voice calls, and little for data. Prices will rise now that Jio’s aggressive entry is effectively turning the fragmented telecom market into a duopoly. Still, it’s unlikely that Indians who came online only because Ambani made it affordable would be able or inclined to pay much for JioTV or JioCinema.