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Why did Google invest in Bharti Airtel?

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The deal seems to have now closed as Airtel’s board has allotted over 71.1 million shares to Google.

On 28 January 2022, Google first announced its plan to invest $1 billion in India’s second largest mobile phone operator, Bharti Airtel.

The deal seems to have come to a close with the board of Bharti Airtel allotting over 71.1 million shares to Google on a preferential basis earlier this month.

The investment aims to increase its presence in the market open to only one billion people as well as foreign companies.

India is the third largest economy in Asia and is currently a major growth driver for Silicon Valley. This has been a major area following China’s crackdown on its technology industry.

The decision to invest in a wireless carrier may complement Google’s other investments in India.

Google had earlier bought a $4.5 billion stake in billionaire Mukesh Ambani’s Jio Platforms.

here are the details.

deal

As part of the agreement, Google will invest the funds using both commercial and equity methods.

The company will acquire a 1.28% stake in Airtel for $700 million.

The remaining $300 million will be part of a fund that will be invested over five years in the areas of equipment, network and cloud technologies.

Google International LLC will receive approximately 71.1 million equity shares of Bharti Airtel.

The allocation will be on a preferential basis at Rs 734 per piece, for a total of Rs 5,220 crore ($700 million).

Why is Google investing in Airtel?

The deal between Google-Airtel is a link to the Google-Jio deal. Google-Jio aims to collaborate in developing a customized version of the Android mobile operating system for Indian users.

The Google-Airtel deal will help create low-cost, entry-level smartphones for Indian users. Airtel is also investing heavily in satellite connectivity to offer internet in remote locations of India.

In July, it formed a joint venture for satellite broadband with the local arm of Hughes Network Systems, a business that Reliance Jio has yet to enter.

What’s in it for Airtel?

The money invested by Google will help Airtel develop a variety of consumer electronics. The electronics will be at different prices to make them affordable for the users.

The funding will give the company more resources to promote its 5G plan. The company is already using Google’s 5G-ready Evolved Packet Core (EPC) and software-defined network platform.

This will immunize Airtel against its telecom rival Jio in its 5G plans. It will also enhance the functionality of its existing 4G network.

The deal will help Airtel improve the online ecosystem and accelerate network access.

To finish

Google plans to acquire major companies to support digital growth rather than invest in them.

Reliance and Airtel are multinational corporations that are leaders in innovative technologies and dominate their respective markets.

Google’s investment strategy is to fund businesses making such a significant move to reach Tier 2 and Tier 3 places and close the language gap.

There are already 500 million internet users in India, and Google’s strategy is to reach an additional 500 million people. It will bridge the wide gap between multilingual internet services.

For more information about the company, you can check the factsheet and quarterly results of Bharti Airtel.

Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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