On 28th August, it was announced that Bharti Airtel might get an investment of up to thousands of crores from Google. According to sources, Google and Airtel were in talks for over a year and are currently said to be in the advanced stages of negotiations. Airtel is also planning other fundraising options as it had a debt of Rs 1.6 lakh crore in June 2020 because it was unable to raise tariffs freely.
Google had earlier invested over Rs 33,737 crore in Reliance industries digital subsidiary, Jio Platforms Ltd in order to get a stake of over 7.73% in the Jio platforms which is currently the main rival of Airtel. Both Google and Airtel have not made any formal announcements regarding the upcoming deal, but media sources say that Google's investment in Airtel will be several thousand crores of rupees.
The details of the partnership are being worked up by the executives of both the companies, while their internal and external legal and M&A teams are involved with sorting out the smaller details of the arrangement.
Why Google may invest in Airtel?
According to one of the Analysts, “The entry of Google adds strength to the balance sheet of Airtel. Also, it helps the company strategically as Google brings in innovation capabilities and strength on data analytics. Google’s data monetization is far superior to any other company in the world, and it can help Airtel monetize its data much better to improve its realizations and profitability.”
The analyst also added that, Google may have big reasons to why it’s investing in Airtel as, “If anything goes wrong tomorrow, your (Google) credibility in the market goes out even though it will be limited liability. To save its name, the company will have to settle its dues in case Airtel is not able to move ahead due to financial pressures and starts slipping down.”
How will this deal benefit Airtel?
If this deal is successful, it will be a major help to Airtel as it is currently facing many problem because of its competitors like Reliance Jio that are providing data at cheaper prices. Jio was the reason behind disrupting the successful financial model of the industry. Other Telecom companies like Vodafone and Idea Cellular were forced to merge because of the stiff competition from Jio.
Google’s investment and data monetization methods have the possibilities to help Airtel to become successful, earn more money and work on its profitability. Airtel is also raising more funds so it can increase the capacity of its 4G networks around India. This investment by Google can also help the telecom company to set a lot of things in order, pay off the debts to the government and also invest in 4G and 5G networks.
Google's India Digitization Fund
In July 2020, Google announced that it had set aside $10 billion funds to invest in the startups of India over the course of five to seven years. The investment was said to be in the form of investments, seed investments, partnerships among other arrangements. This was planned in order to accelerate digitization in India and reduce the gap in the Indian tech investments ecosystem.
This fund was said to be invested in the sectors of consumer tech, education, health, agriculture, technology, AR &VR, and helping SMEs. This fund initiative was called the Google for India Digitization Fund as it aimed in helping Indian companies to grow in their Google portfolio.
Top investments made by Google in Indian startups
Google has made numerous investments in Indian startups and ventures over the few years. In 2013, Google has invested Rs 3.13 crore in Sana Ventures as a part of a seed round funding and the same year it also invested Rs 3 crore in Agastya International Foundation. After that in 2017, it went on to invest Rs 3 crore in CueMath which is a well-known online Edtech company. In 2020, Google also invested over $27,500,000 in the series E funding of Aye Finance which is a Gurugram based Fintech Company.
It also invested over $12 million in Dunzo an Indian delivery company in 2021. In 2020, Google invested $100 million for DailyHunt and an undisclosed amount in Glance which is both news platforms. The same year's Google invested over Rs 33,737 crore in Jio Platform which is the digital subsidiary of the conglomerate Reliance Industries. This investment led to Google claiming a 7.73 % stake in Jio Platform and helped Jio clearing its debt ahead of its March 2021 target.
Frequently Asked Questions
How much did Google invest in Reliance Jio?
The same year's Google invested over Rs 33,737 crore in Jio Platform which is the digital subsidiary of the conglomerate Reliance Industries.
What is Google's India Digitization Fund?
In July 2020, Google announced that it had set aside $10 billion funds to invest in the startups of India over the course of five to seven years.
How much is Google investing in Airtel?
The amount is not disclosed yet but is estimated to be thousands of crores.
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