Reliance Industries on Wednesday said Alphabet Inc’s Google will buy a 7.7 per cent stake in its digital unit for US$4.5 billion, winning the backing of another U.S. tech giant after Facebook Inc in late April.
NEW DELHI/OAKLAND: Alphabet’s Google will buy a 7.7per cent stake for US$4.5 billion in Jio Platforms, taking a seat on its board alongside another big name backer Facebook to help the digital arm of Reliance Industries realise its lofty ambitions.
Reliance, India’s most highly-valued company run by billionaire Mukesh Ambani, has now sold nearly 33per cent of Jio Platforms which houses music, movie apps and telecoms venture Jio Infocomm for 1.52 trillion rupees (US$20.22 billion). Facebook bought into the firm in late April.
The latest investment announced on Wednesday comes just days after Alphabet Inc said it would invest US$10 billion in India via a so-called digitisation fund over the next five to seven years through equity deals and tie-ups.
“As we end our current cycle of capital raising, we are delighted to welcome another strategic partner into Jio,” Reliance Chairman Mukesh Ambani said at the company’s annual shareholders meeting hosted via a webcast.
Google will gain a board seat at Jio Platforms as part of the transaction, a Google executive told Reuters in an interview. Facebook also has a board seat.
The deal with Google will bolster Reliance’s tech ambitions, such as building smart homes, using solutions similar to Amazon.com Inc’s Alexa voice assistant, connected cars and security systems.
Jio and Google will also partner to built a low-cost “4G or even 5G smartphone” for India, Ambani said, in a move that is likely to get tens of millions of Indians to use mobile internet for the first time.
“Through this partnership with Jio Platforms we see the chance to have an even greater impact than either company could have alone,” Alphabet CEO Sundar Pichai said in a video message, adding that the Jio investment was “the first and the biggest” investment Google would make via the US$10 billion fund.
Jio Infocomm, the mainstay of Jio Platforms and India’s largest mobile carrier with more than 387 million users, will also widen Google’s reach in a country where just about 500 million of its 1.3 billion population use the internet.
Google could potentially also benefit from Ambani’s closeness to the nationalist government of Prime Minister Narendra Modi which has taken a hard stand on issues such as data localisation and digital taxes, a headache for big tech firms such as Facebook and Google.
Reliance, which has also won the backing of Qualcomm Inc and Intel Corp for Jio Platforms, has built an in-house 5G solution and is ready to rollout 5G services as soon as airwaves are available, the company said.