Indian conglomerate Reliance Industries and social media giant Facebook are coming together to create a multi-purpose app, similar to China's WeChat, says a media report.
The new app will come with several functionalities, including e-commerce, social media, gaming, bookings for flight and other services and payments. Morgan Stanley has been hired as the investment banker for the project, and due diligence of the app is underway, according to the media reports. The project might be delayed because of the travel and other restrictions in most parts of the world that have followed the outbreak of coronavirus.
Reliance Industries, the parent company of mobile operator Reliance Jio, owns several other businesses, including retail chain Reliance Retail and online fashion store AJio. The new app should lead to cross-selling opportunities and provide insight into user spending habits.
The move is in keeping with Jio’s vision of becoming a fully digital company, instead of just providing connectivity to its users. The operator has previously outlined an ambition of addressing all its customers' digital needs, from basic connectivity through to connected cars, smart homes and apps.
With 280 million subscribers at the end of December 2019, Jio commands a 23.8% share of the market and is the third-largest service provider in the country, according to data released by the Telecom Regulatory Authority of India (TRAI).
A product like WeChat – which may leverage the WhatsApp platform, a messaging app owned by Facebook – could help the company to increase its footprint in India. (See Facebook likes Reliance Jio.)
It's unclear what could finally emerge from the collaboration between the two companies. A possibility is that a new joint venture takes shape. Alternatively, Facebook could acquire a stake in either Jio or Reliance Industries, as reported earlier this month by the UK's Financial Times. Facebook has previously invested in Meesho, a reselling app, and Unacademy, a learning platform, in India.
With more than 300 million Facebook customers in the country, India is one of the biggest markets for the social network. WhatsApp, meanwhile, has more than 400 million users in India.
Furthermore, it is one of the few geographies which still promises a massive increase in the number of Internet users. With 451 million monthly active Internet users at the end of 2019, India is the second-biggest Internet market in the world, after China. But even with these high numbers, Internet penetration is just 36%, according to the Internet and Mobile Association of India (IAMAI).
A good proportion of Jio's subscribers are first-time users of mobile broadband, who moved from 2G to 4G when Jio launched its free plans. Facebook has been exploring ways to engage more with this segment on its platform. About three years ago, it launched its Free Basics plan in India, which gave free access to basic Internet services to users who couldn't afford 4G data plans. This initiated a massive debate about net neutrality in India and Free Basics was finally banned by TRAI.
While most of the service providers would be happy to work with Facebook, it helps that Jio is the newest operator in the country, with the most modern network, and that it is a pure-play 4G operator. All this means it is better placed to capture a sizeable chunk of the new business. Even with its huge debts, Jio has a parent with such deep pockets that it remains in a good position.
— Gagandeep Kaur, contributing editor, special to Light Reading