How will Google investment increase hope in Bharti Airtel shares?

Bharti Airtel is India’s largest telecom company, with a presence across 18 countries. Recently it has been announced that Google will invest upto $1 billion in Bharti Airtel.

Indian Duopoly stronghold

India and Reliance Jio enjoy an almost duopoly status with their market penetration. After China’s crackdown on its technological industry, Google has identified India as the strongest geography to fuel its growth in emerging economies and thus, this investment is in line with its goal to invest upto $10 billion in India via its digitisation fund over the next five years through such investments and tie-ups. It has already invested $4.5 billion in Reliance Jio and is expanding its investment into the other major player in the Indian telecom space.The choice by Google to invest in the cellular carrier could go well with its previous ventures in India.

Investment Deployment

Google will invest $700 million directly for a 1.28% stake in Bharti Airtel share price and spend $300 million in the following five years through business agreements geared towards low-cost mobile devices, improving and expanding 5G network capabilities, and cloud technologies.Google expects Airtel to enjoy an EBITDA potential growth of over Rs. 100 billion if Vodafone-Idea cannot improve its average revenue per user metrics to sustainable levels even with its large-scale capital deployments.

The google integration also allows Airtel to grow its revenues and customer base by leveraging cross-sell integrations through Google’s tech solutions and devices. Their first commercial agreement is also towards digital inclusion and affordable devices to improve penetrations, especially in rural and lower-income consumer segments, whichaligns with the government’s Digital India program.

Market Penetration

India has around 750 million internet users, with hundreds of millions more yet to come online. This might be possible as integrations like these make digital and physical telecommunication offerings cheaper and more accessible. Thus, the total addressable market for the company still has a lot of scopes to grow with increasing penetration. India already has the world’s cheapest internet rate, courtesy of Jio and their price wars which have spiked a significant increase in internet penetration in India.

And as the population and internet penetration keeps growing, the market for digital products like the ones offered by companies like Airtel, such as Airtel Fibre Internet, Airtel Payments Wallet, Airtel DTH etc., will only grow.To reach Tier 2 and Tier 3 areas and bridge the language divide, Google’s investment approach is to sponsor such pivotal enterprises.Google’s goal is to reach an additional 500 million people. This decreases the wide gap between multilingual digital services online.

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