Facebook is reportedly in talks to buy a multibillion-dollar stake in India's largest mobile network, Reliance Jio.
The negotiations, according to the FT's sources, have been stymied by the international travel lockdown caused by the COVID-19 outbreak, but will potentially see Facebook acquire a 10 per cent stake in the business, which boasts around 370 million mobile subscribers.
In addition to serving as a carrier, Reliance Jio is actively involved in the manufacture of handsets – both feature phones and smartphones. These tend to be cut-price affairs, white-labeled from OEMs, and aimed at price-conscious markets.
The flood of phones from Reliance Jio has slowed to a trickle in the past year or so, but the firm has committed to releasing new kit this year, including a range of 4G handsets that'll be priced between ₹2,000 and ₹3,000 (£22 to £33).
Beyond hardware, Reliance Jio also owns a 16 per cent stake in KaiOS following a $7m investment in 2018. KaiOS, once described in The Reg as the phone OS that muggers wouldn't touch, is the feature phone platform forked from Mozilla's ill-fated Firefox OS, and forms the basis of Reliance's cheapest handsets.
In its latest annual results for the year ended March 31 2019, Reliance Jio said it turned over Rs. 39,051 crore (£4.32bn, $5.13bn) in sales, had a subscriber base of 306.7 million and EBITDA of Rs. 15,194 crore (£1.68bn) for the year, with EBITDA margin of 38.9 per cent.
As you'd expect from any emerging economy, India is a growth market for mobile, both in terms of subscribers and device sales. It makes sense that Facebook would seek a piece of the country's biggest player.
However, Facebook has a complicated relationship with the Indian market, and this could potentially cause it regulatory and political headaches further down the line.
On one hand, its social apps are hugely popular in the domestic market. Its chat app WhatsApp, acquired in 2014, has around 400 million subscribers in India and will soon launch a WeChat-style payments service. Meanwhile, India is Facebook's biggest market, boasting nearly 241 million users in 2019.
Back to basics
However, the firm's grander infrastructure ambitions have been hamstrung by popular and political pushback. The best example of the latter is the firm's Free Basics service, which offers zero-rated access to certain websites, including Facebook.
Back in 2015, Facebook inked a deal with Reliance to launch Free Basics for the Indian market. The package allowed mobile users free, low-speed access, on Reliance Communications' network, to a selection of websites that had been hand-selected by the social network. While Facebook framed the product as a public service, critics argued it was an attempt to exploit the economic circumstances of India's poor in order to shut out competition. One year after its launch, India's Telecom Regulatory Authority banned it – saying providers were not allowed to offer discriminatory tariffs for data services based on content, nor enter any deals to subsidise access to certain websites.
Soon after the ban, CEO Mark Zuckerberg said he had been "inspired by how much progress India has made in building a strong nation and the largest democracy in the world, and I look forward to strengthening my connection to the country". India, don't say he didn't warn you. ®