Facebook to invest $1.6 bn this year

Social networking giant Facebook, whose user base is expanding primarily on the back of rising penetration in emerging markets like India and Brazil, will make capital investments worth $1.6 billion this year.      

In the first half of this year, the California-based firm incurred a capital expenditure of $595 million on setting up data centres and storage infrastructure, among others. Besides, Facebook shelled out $221 million on acquisitions and other assets such as patents.  “We anticipate making capital expenditures in 2013 of approximately $1.6 billion,” Facebook said in a filing to the US Securities and Exchange Commission (SEC).

Industry watchers feel that the company will be looking to capitalise on its user numbers and its mobile advertising base.      

Bolstered by rising number of users in high growth markets like India and Brazil, Facebook raked in 61 per cent — $1.60 billion — of its total revenues from advertising in the second quarter of this year.      

Internet major Google, which is also competing with Facebook, generated 92 per cent of its revenues from its advertisers in the six months ended June 30.      

Facebook’s investment plans for increasing infrastructure would get a boost as it posted strong second quarter results helped by a surge in user base and rising mobile ad revenue, which now represents 41 per cent of its total revenue from advertising, they added.      

Facebook posted a net income of $333 million for the April-June quarter against a loss of $157 million in year-ago period. Its revenue totalled $1.81 billion in the second quarter, an increase of 53 per cent, compared with $1.18 billion in the second quarter of 2012.      

“Cash used in investing activities during the first six months of 2013 primarily resulted from $595 million for capital expenditures related to the purchase of servers, networking equipment, storage infrastructure and the construction of data centres,” Facebook said. It also spent $221 million on acquisitions of businesses and other assets like patents, according to the filing.      

On the back of surging user base in the emerging markets of India and Brazil, the social networking giant saw its monthly active users jump 21 per cent to 1.15 billion at the end of June 2013.      

“Users in India and Brazil represented key sources of growth in the second quarter of 2013 relative to the prior year,” Facebook has said.

 

The firm's global daily active users (DAUs) rose by 27% to 699 million on average during June 2013 from 552 million during June 2012, again helped by growth in India, Brazil and other markets.