January 28th, 2022
Via Nikkei Asia, a report on Google’s efforts to push mobile connectivity in India:
Internet search group Google has invested $1 billion for a 1.28% stake in Indian telecom operator Bharti Airtel by dipping into its $10-billion India Digitization Fund, a move that underscores the company’s urgency to make smartphone and internet usage ubiquitous in the country amid increasing regulatory scrutiny.
With the investment in Airtel, Google has now bought into India’s two biggest telecom operators — after buying 7.7% of Reliance Industries’ Jio Platforms for 337.3 billion rupees in 2020 — which together control 67% of India’s cellular market.
Of the $1 billion commitment to Airtel, Google will spend $700 million to buy the telecom company’s shares while the rest will be funnelled into implementing multi-year commercial agreements to “scale Airtel’s offerings and accelerate access and digital inclusion across India’s digital ecosystem.”
“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 in their digital transformation journey,” Sundar Pichai, chief executive officer at Google and its parent company Alphabet, said in a statement.
Google’s investment in Reliance Jio also birthed an $87-dollar smartphone that is expected to help the companies capture the imagination of millions of Indians who are likely to shun their feature phones over the next few years, and use mobile internet for the first time, drawn by cheap data costs. Entry-level smartphones represent a competitive sector in India, dominated by Chinese smartphone makers such as Xiaomi, Oppo and Vivo.
Data in India is among the cheapest in the world, where the likes of Reliance Industries, Airtel and Vodafone are locked in an intense battle to gain new users. While the price war has somewhat eased of late after steep tariff cuts bled the telecom operators, India’s telecom regulator noted in a report in August 2021 that the average user consumes 12.3 gigabytes of data per month at 10.7 rupees per gigabyte.
Low prices, coupled with accrued license fees and other dues to the government, have led to increased debt among Indian telecom operators. Earlier this month, Vodafone-Idea, which trails Airtel and Jio, decided to trade the interest it owes the government with 35.8% stake in the company.
Airtel, which raised 210 billion rupees through a rights issue in August last year, chose to pay interest on its debt. Airtel owes the government about 995 billion rupees, while Vodafone owes 1.6 trillion rupees.
Airtel and Google said in a joint statement on Friday that the funds would also help to make Airtel’s offerings affordable and “explore opportunities to further bring down the barriers of owning a smartphone across a range of price points, in partnership with various device manufacturers,” and create a “technology ecosystem that serves customers and businesses with innovative digital services.”
The companies will also collaborate on 5G and cloud technologies. Airtel claims a clientele of more than 1 million businesses for its enterprise offerings.
Airtel’s stock surged about 1% to 715 rupees during Friday’s trade.
“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,” Sunil Bharti Mittal, chairman of Airtel, said in a statement.
The purpose of writing a cheque to Airtel dovetails with the broader objective of Google’s India Digitization Fund, unveiled in July 2020, to accelerate smartphone and internet usage in India.
A land of 845 million internet users, India has assumed a pivotal role in the growth story of Google, which, along with social network Facebook, has been shunted out of China. Data company Statista estimates that Google accounted for 99.6% of mobile searches in India in June last year, while India had 459 million users of YouTube, Google’s video sharing platform, in 2021. The company said in November last year that a majority of the 150 million users of Google Pay, its digital payment service, are in India.
Google has also emerged as a prolific investor in Indian startups. Its India portfolio comprises quick commerce platform Dunzo, advertising technology player InMobi, digital content provider DailyHunt, neobanking platform Open, digital commerce enabler DotPe, mental health startup Wysa and Slang Labs, an in-app voice assistance provider.
Google’s dominance in India’s digital economy has, however, invited regulatory scrutiny. India’s anti-competitive watchdog is investigating Google over its app store policies, including in-app payments and allegations that the search group uses its dominance in news aggregation to the disadvantage of publishers.
Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.