US technology giant Google will invest up to $1 billion in Indian telecoms giant Airtel as part of its Google for India Digitization Fund.
The deal includes equity investment as well as a ‘corpus for potential commercial agreements, to be identified and agreed on mutually agreeable terms over the course of the next five years.’
It comprises of a $700M equity investment in Airtel at a price per share of INR 734, and up to $300M that will go towards implementing commercial agreements such to scale Airtel’s products and services.
Objectives of the deal are listed as bringing down the barriers of owning a smartphone, creating India-specific network domain use cases for 5G, and scaling up the deployment of Google’s network virtualisation solutions.
“Airtel and Google share the vision to grow India’s digital dividend through innovative products,” said Sunil Bharti Mittal, Chairman of Bharti Airtel. “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.”
Sundar Pichai, CEO of Google and Alphabet added: “Airtel is a leading pioneer shaping India’s digital future, and we are proud to partner on a shared vision for expanding connectivity and ensuring equitable access to the Internet for more Indians. 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.”
Google has been spending lots of cash in Indian telco related businesses of late. In 2020 it announced it will invest a further $10 billion in over the next few years as part of its Google for India programme. I also purchased a stake in Reliance Industries’ digital ventures business unit Jio Platforms, paying $4.5 billion for a 7.7% share. That year it was also rumoured to be considering an investment in struggling Indian telco Vodafone Idea.
And it’s not just Google – in that same year Amazon was rumoured to be mulling over a $2 billion stake in Airtel, and Facebook announced it would invest roughly $5.7 billion for a 9.9% stake into Jio platforms.
It all paints a picture of what seems like a land grab by the US tech giants to get a slice of the huge Indian telco market – acquiring part ownership of the big domestic firms could lend them even more influence in a market which they clearly think will be of increasing importance to them in the years to come.