The deal with Airtel will be funded out of Google’s $10 billion India Digitisation Fund and see the company invest $700 million for a 1.2% share in Airtel at a price of Rs 734 per share (it closed the day at Rs 717 on the Bombay Stock Exchange on Friday).
The remaining $300 million will be spent on areas such as development of affordable smartphones, as well as accelerating digital inclusion, including network domain use cases for 5G and growth of cloud.
TOI was the first to report on Google’s plans to make financial investments into Airtel in its editions dated August 28 last year.
While the investments into Jio Platforms had come at a valuation of $58.1 billion (Rs 4.36 lakh crore) for the Ambani company, the Airtel funding comes at a valuation of $54.7 billion (Rs 4.1 lakh crore).
Airtel and Mittal will look to ride the partnership with Google to gain valuable insights around development of affordable smartphones — something that had helped Jio in the creation of JioPhone Next — apart from strengthening their foray into 5G.
Airtel said Google’s partnership with Jio Platforms, where it also got a board position, is not in conflict with any deal.
Sunil Bharti Mittal, chairman of Bharti Airtel, said the companies have a vision to grow India’s digital dividend through innovative products.
“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,” he said.
Sundar Pichai, CEO of Google and Alphabet, said the companies have a “shared vision” to expand connectivity and ensuring equitable access to the internet for more Indians.
“Our commercial and equity investment in Airtel is a continuation of our Google for India Digitisation Fund’s efforts to increase access to smartphones, enhance connectivity to support new business models and help companies on their digital transformation journey,” Pichai said.
Under the larger ‘strategic goals’ of the partnership, both companies will look to co-create India-specific network domain use cases for 5G and other standards with cutting-edge implementations. Airtel already uses Google’s 5G-ready Evolved Packet Core & Software Defined Network platforms and plans to explore scaling up the deployment of Google’s network virtualisation solutions to deliver a superior network experience to its customers.
The companies will also focus on shaping and growing the cloud ecosystem in India to accelerate their digital transformation journeys. Airtel serves more than one million small and medium businesses with its enterprise connectivity offering, and this partnership is likely to help accelerate digital adoption.
Prashant Singhal, the telecom leader at Ernst & Young India, said apart from playing out in India, the partnership also has the potential to positively impact Airtel’s operations across Africa.
“There will be multiplier effects. We feel that Google’s keen focus on India is a great confidence booster for the local industry, and also for Airtel. The partnership will help in getting 5G use cases faster in the market, apart from development of affordable devices and cloud infrastructure.”
Asked whether Airtel will continue to offer cloud services of other operators such as AWS and Oracle, Airtel CEO Gopal Vittal said the Google partnership is not exclusive in nature: “We will continue to work with multiple partners. There is no exclusivity for either of the partners.”
He said Airtel will continue to make investments into network expansion and other business areas, such as home broadband, data centres and 5G networks. “We are investing about $2.5 billion annually, and these will continue.”