Google will invest up to $1 billion (A$1.43 billion) in India’s Bharti Airtel as the US technology giant extends its presence in the country, driving the telecom operator’s stock up as much as 6.6 percent.
The investment is part of Google’s two-year-old strategy to spend $10 billion in India through its digitization fund over five to seven years through stock agreements and tie-ups.
According to the firms, Google’s investment includes a US$700 million equity investment in Airtel at 734 rupees (A$13.99) per share and up to US$300 million for implementing commercial agreements, including investments in developing Airtel’s goods and services.
The investment would help Airtel improve its devices, home broadband, data centers, cloud adoption, and, over time, 5G networks, according to Bharti Airtel’s CEO, India & South Asia, Gopal Vittal, during a conference call with analysts.
“What this will do is drastically accelerate our digital agenda, and that’s where we’ll double down and really go deep,” Vittal said, without expanding on specific plans.
After Jio, controlled by India’s richest man Mukesh Ambani, entered the market in late 2016 with free phone calls and reduced data pricing, India’s telecom business has been heavily affected by a price war in recent years.
After Jio, controlled by India’s richest man Mukesh Ambani, entered the market in late 2016 with free phone calls and reduced data pricing, India’s telecom business has been heavily affected by a price war in recent years.
Airtel, India’s second-largest carrier, has stated that it will gradually boost tariffs and raise to 210 billion rupees last year to reduce debt and drive expansion.
According to Aliasgar Shakir, a telecom analyst at Motilal Oswal Financial Services, Google’s investment would help Airtel provide inexpensive handsets to its consumers, construct 5G, and accelerate the cloud ecosystem for small and medium companies.
In July 2020, Google invested US$4.5 billion in Reliance Industries’ digital business Jio Platforms, which houses Airtel’s competitor Jio.
Months later, the businesses released a low-cost 4G smartphone with a modified Android operating system geared at first-time smartphone purchasers.
According to Ambit Capital analyst Vivekanand Subbaraman, Google controls approximately 75 percent of India’s smartphone market through Jio and Airtel.
“I think once a guy puts money in, that’s stepping on the throttle,” he says. “There will be more that we will learn in the coming days.”
