Amazon Eyeing Airtel For $2 Billion Deal To Fit Into India's Telecom Market

Yash Raj Srivastava Yash Raj Srivastava
Jun 5, 2020 4 min read
Amazon Eyeing Airtel For $2 Billion Deal To Fit Into India's Telecom Market

Amazon has made a huge impact on India's market and is now eyeing for an entry into the Indian telecom industry. Reuters has reported that Amazon is trying to buy a 5% stake in Airtel, one of the leading telecom providers in the country. Airtel being the third largest Indian telecommunication provider can prove to be a game changer with the help of the US based e-commerce giant.

American giants have started to invest in Indian based firms lately. They are focusing on taking the Indian telecom services to the next level. These investments will help Indian based telecom industries expand their business to different countries and create an international presence.

Also Read: Amazon Experimenting In Food Delivery Services In India

It can create a big impact in the market if believed to be true

Deal At an Early Stage

Although this deal is in its early stages, it's a small step towards the globalization of India's telecom industry. And it will surely help in boosting India's economy. As more and more countries look for investing in India, the coronavirus pandemic being one of the catalysts, this news can be termed as the start of something good from an economic front, a change needed in this time of crisis.

great competition in the Telecom Industry

A Wave Of Competition In The Telecom Industry

What makes this deal interesting is that it has come at the time when Indian telecom service providers are receiving investments from the big shots. Reliance Jio sold its stake of around $10 bn from several investors over the past few months. Investors like Facebook, General Atlantic ($869 Mn), Vista Equity Partners ($1.5 Bn), Silver Lake ($746 Mn), and KKR($1.5 Bn) have pumped cash in Reliance Jio, the market leader at the moment. The investment by Facebook in Reliance Jio has created a more competitive market in the telecom field.

It can be a great revolution for telecom industry 

Jio has always done something out of the box which allowed it to grow quickly. This has affected giants like Vodafone who have lost a significant share of Indian customers courtesy of Jio. Many have fallen into debt. The announcement of partnership with US based tech giants will change the playing field for all the competitors. An element of uncertainty looms in the air as no can guess what investment news is going to come next.

Mubadala Investment Company, an Abu Dhabi based funding company, has recently announced its intention of purchasing around 1.85 percent stake in Reliance Jio. Mukesh Ambani has confirmed this news.

Also Read: Reliance Industries made Acquisitions worth $3 billion in past 3 years

Google is trying to help Vodafone pare its debt, as talks of Google buying a 5% stake in Vodafone do the rounds. If the purchase happens, Vodafone can again become a valuable contender in the telecom market. Vodafone, once a top telecom service provider, is not doing well financially for some time now. To sustain itself, it's imperative for Vodafone to get back in the competition.

After the Amazon speculation, the share prices of Bharti Airtel have increased by 5.73% per share. Investors have seen happiness after a long time as the investment speculation is no less than a silver lining of hope.

The deal is in nascent stages of discussion, and any change is possible at the moment since sources haven't confirmed the news.

A statement given by an Amazon spokeswoman said the company does "not offer comments on speculation of what it may or may not do in future."

Whereas Bharti Airtel said it will love to collaborate with the digital players around and accept their products, their content and their services provided to the customers. Bharti Airtel stated, "Beyond that there is no other activity to report."

Amazon And The Indian Market

Amazon counts the Indian segment as one of its important growth markets and has a total investment of around $6.5 bn in the Indian e-commerce front. The US based company founded by Jeff Bezos in the recent years has developed a multi venture market in India by bringing voice controlled speaker called Alexa, video streaming site namely Amazon Prime Video, and cloud storage.

Amazon is trying to capture different market opportunities around India and teaming up with the telecom industry players is a major step. Amazon has been a hit in India, becoming a household name.

When Amazon was launched in India in February 2012 via its e-commerce site, it became an instant hit with the people. Indians started to prefer online marketing instead of going out and shopping. It attracted a large range of customers back then and became a major part of India's revolutionized retail segment.

In 2016, Amazon dived into India's streaming industry and has created solid name for itself. Amazon Prime Video has been one of the best streaming platforms in India, and is a formidable competitor to Netflix and Hotstar. Amazon Prime Video is known for its awesome content wand has come up with tailor made Indian content to target audience of all age groups. The music streaming platform provided with the membership of Amazon Prime has only improved its reach. Providing membership to customers at low costs has assisted Amazon in creating a strong hold in India.

With Amazon's entry in the Indian telecom segment through Bharti Airtel, people can expect new enhancements at lower costs. If Airtel can succeed in leveraging Amazon's capabilities, it can potentially seize a large number of Indians. It would be interesting to see the Indian telecom industry with the re-emergence of the market leaders.

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