- Google is in final talks with Airtel and is about to invest $1 billion, subject to regulatory approvals.
- Analysts say that it has already invested in its rival Jio and it is willing to make a risky investment in Airtel, so it might have had really strong reasons for it.
- Google and Airtel are willing to work together to make affordable smartphones available to the masses and it is a part of Google’s ‘Google for India Digitization Fund’, making it the only company that has invested in Jio and Airtel, both.
Alphabet Inc’s Google invested more than 34000 crores in Mukesh Ambani’s Reliance Jio platforms in 2020. Now, it is investing $1 billion in Airtel, which is Reliance Jio’s main rival in the telecom sector.
This is a part of its Google for India Digitization Fund, making it the only company that has invested in Jio and Airtel, both.
This investment is a huge breather for Sunil Mittal from Airtel which is facing stiff competition in the telecom sector. The entry of Google adds strength to Airtel’s balance sheets. Strategically, it is an advantage as Google will bring in innovation and strengthen data analytics.
This will help Airtel to improve its profitability. Both the companies will co-create India-specific network domain use cases for 5G and other standards, with cutting-edge implementations.
“Our commercial and equity investment in Airtel is a continuation of our Google for India Digitization Fund’s efforts to increase access to smartphones, enhance connectivity to support new business models, and help companies on their digital transformation journey,” said Sundar Pichai, CEO of Google and Alphabet.
“Airtel and Google share the vision to grow India’s digital dividend through innovative products. With our future-ready network, digital platforms, last-mile distribution and payments ecosystem, we look forward to working closely with Google to increase the depth and breadth of India’s digital ecosystem,” said Sunil Mittal.
As per the deal, Google is investing $700 million to acquire a 1.28% stake in Airtel, and the remaining $300 million is towards potential multi-year commercial agreements. This deal is subject to necessary regulatory approvals.
Airtel said that this partnership with Google will focus on enabling affordable access to smartphones across price ranges. It will help in accelerating the cloud ecosystem for businesses across India. Together, they will build on Airtel’s offerings that cover a range of Android enabled devices via innovative affordability programs.
Airtel is already using Google’s 5G ready Evolved Packet Core and Software Defined Network platforms. It plans to scale up the deployment of Google’s network solution in an attempt to deliver a superior network experience to its customers.
“Google’s entry could turn Airtel’s balance sheet around, as well as providing strategic assistance with its expertise on data analytics,” an analyst told TOI.
Airtel poses strong risks for any investor, especially due to its plight after Jio revamped the industry with its economic data rates. This pressure even forced Vodafone and Idea to merge. Google must have had very strong reasons to invest in Airtel.
“If anything goes wrong tomorrow, your (Google’s) credibility in the market goes out even though it will be limited liability. To save its name, the company will have to settle its dues in case Airtel is not able to move ahead due to financial pressures and starts slipping down,” the analyst added.
