New Delhi: Google will invest as much as $1 billion in India’s second-largest mobile phone operator, as firms race to offer inexpensive data and digital offerings in the only billion-people-plus market still open to foreign companies.
Alphabet Inc., which owns the Google search engine, will pay $700 million for a 1.28% stake in Bharti Airtel Ltd., the New Delhi-based company said in an exchange filing Friday. Another $300 million will go toward multi-year plans that will include devices.
Asia’s third-largest economy is a key growth driver for Silicon Valley, especially after China’s crackdown on its technology sector. The move to invest in the wireless carrier could be complementary to Google’s other investment in India — it bought a $4.5 billion stake in billionaire Mukesh Ambani’s Jio Platforms Ltd. in 2020 and has co-developed an affordable smartphone — riding on Prime Minister Narendra Modi’s flagship ‘Digital India’ program.
Bharti’s shares surged as much as 6.6% after the announcement that involves Google buying the carrier’s equity at Rs 734 per share. That’s roughly a 4% premium to Thursday’s closing price.
The investment “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,” Sundar Pichai, chief executive officer of Google and Alphabet said in a statement.
The funding from Google gives billionaire Sunil Mittal-led Bharti more firepower to bolster its 5G plans as well as take on Ambani’s rival telecom service which went from being a disruptive entrant in 2016 to the country’s largest wireless provider within a few years by offering free calls and ultra-cheap data.
The funds will also help Bharti, which had 355.3 million users in India as of November, gear up to buy the expensive 5G airwaves in an auction this year that will kick-start India’s journey in the super-fast networks that are already in use in countries like China and South Korea. Bharti raised $2.8 billion through a rights issue in October, hiked mobile-phone tariffs in November, and prepaid some airwaves-related government dues in December, as part of overall efforts to boost its balance sheet.
The India carrier in July tied up with Intel Corp. to prepare its networks for 5G and is partnering with Indian conglomerate Tata Group to develop an indigenous 5G technology. It also formed a joint venture with Hughes Network Systems’s local unit this month for satellite broadband in India.
Google’s investment in Bharti is awaiting regulatory approvals, the filing said.—Bloomberg
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