Google to Invest $1 Billion in Airtel | How Google-Airtel Deal benefits Airtel’s 5G Transformation

Google has planned to invest up to ~1 Billion or Rs. 7,500 Cr. in Bharti Airtel Limited as part of its Google for India Digitization Fund. Hence, in this article, we will be discussing this news and its impact on the Airtel stock. So, let’s start.

Google-Airtel Deal:

• Google has planned to invest up to Rs. 7,500 Cr. in Bharti Airtel Limited. Google will be investing $700 million or around Rs. 5250 Cr. directly in Airtel and will be acquiring a 1.28% stake at the rate of Rs. 734 per share. This investment of Google will be part of its Google for India Digitization Fund.
• The rest of $300 million or around Rs. 1750 Cr. will be utilized in the commercial agreements in the coming years in areas of 5G, affordable mobile devices, and cloud technologies.
• The partnership will focus on enabling affordable access to smartphones across price ranges and will continue to explore building on their existing partnerships to potentially co-create India-specific network domain use cases for 5G and other standards, and help accelerate the cloud ecosystem for businesses across India.
• In India, more than 35 Cr. users still use 2G technology or mobile phones, and hence a big opportunity is available for the telecom players especially Airtel and Jio which are leading the industry currently.
• The majority of the 2G mobile or technology users belong to Vi. Here, Reliance Jio is trying to gain customers from this segment via the launch of affordable smartphones like ‘JioNext’ which has gained healthy traction. Hence, on the same line, Airtel will also try to gain some customers via the launch of affordable mobile devices and has received help in the same from Google.

What Should Investors Do?

Such big tech giants or companies like Google are investing in such Indian companies showcasing the next 1-2 decades belonging to India. At its current valuation, the arrival of such big investors is a big positive for Airtel. Also, the price war in the telecom space looks over, and hence the telecom companies are likely to witness increasing Average Revenue Per User (ARPU) which will be quite beneficial for the companies. Hence Telecom space in the country is developing rapidly, and hence investors should keep on radar such counters where business fundamentals are intact, industry size is quite big, and there is good governance as well, here such investment will always be an icing to the cake.