Google will invest as much as $1 billion in Bharti Airtel Ltd, India’s second-biggest telecom services provider, as the Internet giant redoubles efforts to increase smartphone access and accelerate digital transformation in the world’s second-most populous nation.
Alphabet Inc., the parent of Google, will buy a 1.28% stake in Bharti Airtel for $700 million and invest $300 million over the next five years in commercial arrangements in the areas of affordable mobile devices, 5G network and cloud technologies. Google’s investment is aimed at developing the digital infrastructure in India, which will, in turn, generate demand for its products and services, including cloud computing, mobile devices, apps and digital advertisements.
Google’s latest move follows a $4.5 billion investment in RIL’s digital unit, Jio Platforms Ltd, in July 2020. Both the investments are routed through the Google for India Digitization Fund.
“Big tech investments in infrastructure have been steadily increasing, and seeing it happen in India is a sign of a more symbiotic relationship developing between the telecom and digital sectors,” said Vaibhav Kakkar, partner at Saraf & Partners. Bharti Airtel will sell shares to Google at ₹734 apiece, the firm said in an exchange filing on Friday. Airtel’s shares rose 1.23% to ₹715.9 on BSE.
“As part of the first commercial agreement, Airtel and Google will work together to build on Airtel’s extensive offerings that cover a range of Android-enabled devices to consumers via innovative affordability programmes,” the carrier said. The commercial agreements will also be aimed at 5G network enhancement and accelerating adoption of cloud computing.
{{/usCountry}}“As part of the first commercial agreement, Airtel and Google will work together to build on Airtel’s extensive offerings that cover a range of Android-enabled devices to consumers via innovative affordability programmes,” the carrier said. The commercial agreements will also be aimed at 5G network enhancement and accelerating adoption of cloud computing.
{{/usCountry}}Bharti Airtel chief executive Gopal Vittal said that the company has no plans to build smartphones with Google but will work to increase smartphone adoption.
Making smartphones more affordable will be done through targeted incentives, cash-backs and partnerships across device and e-commerce players.
“We are going to be competitive in the market, so wherever there is an incentive to be given, we have developed the software capability to target it into a device in order to be really smart and minimize the economic cost of that,” Vittal said.
Market watchers said that the deal was a win-win for both.