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Today, Bharti Airtel announced a strategic partnership with Google, with the tech giant buying a 1.28% stake in the telco. Notably, this investment comes under the tech giant's Google for India Digitization Fund.
Google for Indian Telecom - First Jio, Now Bharti Airtel
In a joint statement, the companies said that they have a "long-term, multi-year agreement". Under the investment program, Google will first buy a 1.28% stake in Airtel, at Rs. 734 per share for $700 million. Afterward, it will invest up to $300 million to implement commercial agreements. These agreements include investing in the telco's products and services and developing its network infrastructure and ecosystem.
According to the companies, the investment will come over the next 5 years, which is good for Airtel; that cash could come in handy at the 5G spectrum auction later this year.
On the occasion, Sunil Bharti Mittal, Chairman, Bharti Airtel, said, "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."
Sundar Pichai, CEO of Google, said, "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". Pichai added, "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 taken an interesting liking to Indian telcos. Last year, it had invested heavily in Reliance Jio, taking up a 7.73% stake in India's largest telco. Back then, Google had invested Rs. 33,737 crores in the telco, and the latest investment takes its stake to over Rs. 40,000 crores.
What the Agreement Entails
The first commercial agreement will see Google invest in Airtel's portfolio, along with financing affordability programs. Along with that, the companies will try to bring affordable connectivity. However, the partnership will "bring down the barriers of owning a smartphone across a range of price points". This means that Airtel might go again with offering financing smartphones, like the telcos in countries like the US do. Since Airtel has made it clear that it will not go for manufacturing mobiles as Jio did with its JioPhone range, this remains the only other option for Airtel to compete on similar ground.
Along with that, Google will also partner with Airtel in developing India-specific use cases for 5G, along with other network solutions. Incidentally, Airtel has already been using Google's 5G-ready EPC & SDN platforms, virtualizing its network core with Google's solutions.
Lastly, the two companies will also focus on growing the cloud ecosystem in the country, with Google's cloud-native solutions already being used in Airtel's networks.
Both companies will also focus on shaping and growing the cloud ecosystem in India to accelerate their digital transformation journeys. Airtel serves over one million small and medium businesses with its enterprise connectivity offering, and this partnership will help accelerate digital adoption.