Bharti Airtel is the second Indian telecom firm after Jio in which Google is making equity investment
India needs a multi-pronged approach to connect its 1.3 billion people and there will be no conflict of interest among vendor partners post Google’s investment in Bharti Airtel, a senior official of the domestic telecom major said on Friday.
Bharti Airtel is the second Indian telecom firm after Jio in which Google is making equity investment.
Google will invest as much as $1billion in Bharti Airtel in picking up a 1.28% stake and in scaling up offerings of India’s second-largest mobile phone operator.
Alphabet Inc’s Google will pay $700 million (₹734 per share) for a 1.28 % stake in Bharti Airtel Ltd and the rest towards multi-year plans that will include devices.
“As far as the question goes on the conflict of interest of Google, we partner with several companies, just as Google partners across several companies, and like I mentioned in India, you do need a multi-pronged approach to drive adoption of digital.
“It’s a complex problem and our partnership is really focused on driving mutually agreed objectives with a shared vision,” Bharti Airtel India and South Asia MD and CEO Gopal Vittal said during an investor call.
He was replying to questions around probable conflict of interest with Google being an investor in the company’s rival firm Jio as well.
Google had in July 2020 invested $4.5 billion for a 7.73% stake in billionaire Mukesh Ambani’s Jio Platforms.
The U.S. tech behemoth got a seat on Jio’s board and has co-developed JioPhone Next — the world’s most affordable all-touchscreen smartphone running on Pragati OS, an optimised version of Android OS.
As part of its first commercial agreement, Airtel and Google will work together to build on the Indian firm’s extensive offerings that cover a range of Android-enabled devices to consumers via innovative affordability programs.
“I think in this particular case (deal with Google), we also felt that bringing it together in the form of a strategic equity partnership with a small dilution is actually a very compelling way to bring the two companies together to meet the same shared objectives that you share.
“So that’s really the purpose of it, I think, is much more strategic than just access or need for capital because that capital could have come from anywhere,” Mr. Vittal said. The companies will explore opportunities to bring down the barriers of owning a smartphone across a range of price points, in partnership with various device manufacturers.
The commercial arrangement includes the development of the cloud ecosystem in India which is one of the strategic interest areas and business drivers for Google.
Mr. Vittal allayed apprehensions on whether Google’s entry as an investor will have any impact on vendor or business partnerships.
“There is absolutely zero conflict of interest. We are working across multiple players and will continue to work across multiple players in all areas, whether it’s devices working across devices, whether it’s e-commerce players, device manufacturers.
“Similarly on the cloud, we work across several hyperscalers. We’re building data centres for all of the hyperscalers and we are taking specific workloads onto the cloud through partnerships with works with hyperscalers,” Mr. Vittal said.
He added that Google’s $300 million investment for commercial agreements will be utilised over a period of five years for devices, networks and cloud.
Mr. Vittal further said the company is not keen on a subsidy game.
“But equally, we are going to be competitive in the market. So wherever it needs to be done, if there is an incentive to be given, then we have developed the software capability to target it into a device in order to be really smart and minimize the economic cost of that,” he said.
The company plans to use a targeted incentive approach using its own data model.
Mr. Vittal said 5G will rapidly scale up in India in the next two to three years and companies like Google will provide Airtel the capability to develop applications and software to reshape customer experience.
He added that the company’s standalone businesses like Airtel Payments Bank, Nxtra, Wynk, Airtel Ads and Airtel IQ would comfortably emerge as unicorns and add to India’s tally of 83.