Bharti Airtel gets a $1 billion boost from Google

• Airtel has sold a 1.28% stake to Google for $700 million, further deepening its ties with the Android maker.
  
• In addition to this, Google will also plough in about $300 million that will go towards various strategic initiatives, including a smartphone affordability programme.
  
• Airtel is currently India’s second largest telecom provider.
  

Sunil Bharti Mittal-led Airtel has received a new shot in the arm with an investment of up to $1 billion from US-based tech giant Google as it looks to bolster its war chest ahead of the expected 5G spectrum auctions later this year.

According to the announcement made by the Jio rival today, Google will acquire a 1.28% stake in Airtel for $700 million (approx. ₹5,250 crore). The remaining $300 million (approx. ₹2,250 crore) will go towards implementing certain commercial partnerships, including a tie-up for offering affordable Android phones to Airtel subscribers in the country.

Airtel’s shares were up by over 1.5% at 10:00 a.m., today (January 28).


An expansion of carrier-smartphone companies’ partnerships in India

While the $700 million stake acquisition is a fairly important aspect of Google’s $1 billion investment in Airtel, there is another aspect that might have a major impact on the telco’s performance and its subscribers.

“Together, the [two] companies will continue to explore further opportunities to bring down the barriers of owning a smartphone across a range of price points, in partnership with various device manufacturers,” Airtel said in a statement.

This means that we could see Airtel etch out partnerships with smartphone companies to offer smartphones at subsidised prices. It’s not really a new concept even for the Indian market, but the scope so far has been significantly limited. Telecom companies have usually offered discounts on major high-end phones like the iPhone.

It remains to be seen if this partnership will actually cater to the mass market by offering budget and mid-range smartphones at subsidised prices. It will also be interesting to see if this will popularise carrier-locked models in India, a practice that is highly popular in Google’s home country, the US.

It is worth noting that Google has also partnered with Airtel’s rival, Reliance Jio, for the JioPhone Next, an ultra low-cost 4G smartphone. This is in addition to Google’s investment in Jio to the tune of $4.5 billion (approx. ₹33,700 crore), apart from partnering with the telco for 5G and other networking solutions.

Network and enterprise solution enhancements

Apart from the consumer side of things, Airtel outlined a few other larger strategic goals of its partnership with Google. One of those is accelerating the adoption of digital solutions by small and medium businesses – Airtel says that it serves over one million of those already, and this partnership will help the company accelerate growth in this area.

Sunil Bharti Mittal, chairman of Bharti Airtel said, “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.”

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