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Here’s why Google wants to invest up to $1B in India’s Bharti Airtel

Sundar Pichai
Photo Credit: Twitter

Indian telecom company Airtel and Google have agreed to a long-term, multi-year partnership to help India’s digital ecosystem grow faster. Google plans to contribute up to $1B as part of its Google for India Digitization Fund, which comprises both equity and a corpus for prospective commercial deals to be identified and settled on mutually agreeable terms over the next five years.

Google announced that it will invest $700M to buy a 1.28 percent investment in Airtel, India’s second largest telecom provider with over 300M subscribers, and another $300M to explore multi-year commercial partnerships with the telco.

Knitty gritty of Airtel investment

Airtel’s products would be expanded to include a wide range of Android-enabled devices for consumers through “innovative affordability programmes,” according to the two companies. According to them, Google and Airtel would look at forming agreements with smartphone manufacturers in order to develop more affordable handsets.

In a statement, Sundar Pichai, CEO of Google and Alphabet, stated, “Airtel is a major pioneer defining India’s digital future, and we are thrilled to cooperate on a shared vision for extending connectivity and guaranteeing equal access to the Internet for more Indians.”

“Our commercial and equity investment in Airtel is part of our Google for India Digitization Fund’s initiatives to expand smartphone adoption, improve connectivity to support new business models, and assist businesses in their digital transformation.”

This announcement especially happened at a time when Airtel and Vodafone are looking for methods to repay billions of dollars to the Indian government. Vodafone granted the Indian government more than 35 percent of its stock earlier this month, making the Indian government the company’s largest stakeholder.

Vodafone and Airtel fight with Jio Platforms, which is run by Mukesh Ambani, Asia’s richest man. Jio Platforms has garnered over 400M subscribers in India as a result of its low-cost voice and broadband services. In 2020, Google had invested $4.5B in Jio Platforms. Facebook and almost a dozen other companies have backed Ambani’s company.

Google and Jio Platforms have also worked together to create a custom Android smartphone that they initially stated would be aimed at the masses. However, analysts believe that the handset, which has already been delayed once, is far too expensive to appeal to a large portion of the public.

Airtel stated that it will collaborate with Google on “bigger strategic aims” and “possibly” co-create India-specific network domain use cases for 5G and other standards.

According to the companies, they also intend to engage in “defining and strengthening” the cloud ecosystem in India. Airtel, which already serves over 1M small and medium-sized businesses through its enterprise connection service, stated that the news on Friday will “help accelerate digital adoption.”

“Airtel and Google share the goal of expanding India’s digital dividend through new products.” We look forward to working closely with Google to improve the depth and breadth of India’s digital ecosystem with our future-ready network, digital platforms, last mile distribution, and payments ecosystem,” said Sunil Bharti Mittal, Chairman of Bharti Airtel, in a statement.

Google’s other investments in India

With over 600M internet users — and another 600M on the way — India is one of the final major growth areas for American technology companies. Google and Facebook both undertook efforts over the last decade to connect tens of millions of Indians to the internet.

Prior to Jio or even Airtel, Google had been closely monitoring Indian companies and considering smart investments or acquisitions that might easily integrate with or expand its products, giving it access to a larger user base.

Google purchased Sigmoid Labs in 2018, a startup that had built the popular “Where is my train” app, which is linked with Google Maps in an effort to provide almost 30M passengers with better visibility into train times and itineraries. Google’s other investments in India include Freshdesk, Practo, Drivezy, Girnar Software, Dunzo and more.

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