INSUBCONTINENT EXCLUSIVE:
New Delhi: Facebook's Rs 43,600 crore investment in Reliance Industries' digital services business will help the Mukesh Ambani-led firm
reduce borrowing and reinforce the company's commitment to cut its net debt to zero by March 31, Moody's Investors Service said on
Thursday.
Stating that the investment is credit positive, Moody's in an issuer comment said it expects the transaction to reduce RIL's
consolidated net debt/EBITDA by 0.4x to well below 3.0x, the tolerance level for its Baa2 rating.
As part of the transaction, Facebook will
acquire 9.99 per cent of Jio Platforms Limited, a fully-owned subsidiary of RIL that houses the company's digital services business
including its mobile telecom services business -- Reliance Jio Infocomm Limited (RJIL).
The transaction also solidifies Jio's leading market
position in India's growing digital ecosystem.
"The investment by Facebook establishes a valuation for RIL's digital services business and
can be used as a base for further divestment by the company," it said.
This also increases RIL's financial flexibility.
In addition to the
financial investment, the companies also announced strategic partnership to tap into India's growing online retail and digital payments
markets.
"While we expect RIL's earnings from its refining and petrochemical segment to be negatively impacted by the global coronavirus
outbreak, its digital services business have benefitted from the increase in demand for digital connectivity," it said.
Moody's said it
expects RIL's EBITDA to decline over the next 12 months but its credit metrics may remain appropriate for its ratings if it successfully
executes its announced transactions.
This article first appeared/also appeared in
https://economictimes.indiatimes.com/markets/stocks/news/facebooks-5-7-billion-investment-in-jio-platforms-to-cut-rils-net-leverage-credit-p
ositive-moodys/articleshow/75328738.cms
