Following the successful launch of Facebook’s (FB) Internet.org in the African continent, it will now offer free Internet service in Latin America. The company is initially launching its Internet.org services in the country of Colombia, which was announced following CEO Mark Zuckerberg’s visit on Wednesday.
Internet.org is a project initiated by Facebook. The company — in partnership with major phone and equipment makers like Samsung, Ericsson, MediaTek, Nokia (NOK), Opera Software and Qualcomm (QCOM) — launched this project in 2013 to increase Internet usage in developing countries.
Through the Internet.org app, one acquires free access to Facebook, Google (GOOGL), Wikipedia, local information websites such as government services and weather information. The main ambition of this project is to bring the Internet to people who cannot afford it.
Limited development in Internet services in many countries remains a setback in an era when Internet as an infrastructure has become the life blood and a prerequisite for economic development. By offering free Internet, the social networking company will not only help connect people but also facilitate the free flow of information, leading to economic growth. Going forward, Facebook expects the Internet.org project to connect over 4 billion people globally.
In Columbia, Facebook has reportedly signed in telecoms operator, Tigo, to launch the Internet.org initiative. Currently, Tigo customers can access 16 basic services through the Internet.org app including websites of Instituto Colombiano para la Evaluación de la Educación (an education service) and Agronet (agriculture and rural development info) as well as Facebook Messenger, UNICEF, Wikipedia and AccuWeather. Facebook is expected to rope in other telecom operators to expand Internet.org’s reach in the country and gradually come up with more free services.
Apart from Columbia, Facebook has launched the Internet.org app in three African countries — Zambia, Kenya and Tanzania — and is expected to extend the service across other developing nations, going ahead.
While Internet.org is an attraction in many developing countries, it is also helping Facebook expand its reach beyond the established markets, in our view. We believe that Internet.org is one of the ways in which the company is penetrating the developing countries which also represent emerging markets for information technology.
Since Facebook has relatively high penetration in most of the markets in which it exists, it needs to look toward economically backward emerging markets. In this context, Facebook is seeking partnerships with wireless carriers to roll out telecom networks and offer data services at affordable prices, particularly in these countries.
In addition, we believe the project will propel the company’s business in advertising segment by increasing Facebook's audience. Currently, Facebook earns most of its revenues from advertising, offering an interactive and engaging platform for advertisers.
Facebook has a Zacks Rank #3 (Hold).
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