Mumbai: Google is investigating a 5% stake purchase in Vodafone Idea citing unidentified sources. In case the bargain goes through, the search giant will be straightforwardly set against Facebook, which last month procured under 10% in Reliance Jio Platforms. Vodafone Idea will likely utilize the money raised to pay approximately ₹58,000 crore in statutory contribution. The telco is additionally in talks for private equity funds for raising cash. Both Vodafone Thought and Google have not commented on the news reports, however. Offers of Vodafone Thought taken off 30% on Friday.
Google’s interest in Vodafone Idea comes at a time of budgetary stress on the Mumbai-based company in the midst of cheap portable duties and solid competition that escalates with the section of Reliance Jio Infocomm Ltd in September 2016.
Why Google may pick up a 5% stake in the Indian business?
- Low valuation?
- Rival FB has invested in a competitor?
- Is there a bigger play in the market with partnerships between Telco and Tech Giants?
Well, Rahul Gupta, Corporate Strategy and M&A Leader stated, “Facebook investing in RJio makes sense for multiple reasons. Most importantly, it is an investment in the most disruptive Telco startup which has now gathered the highest subscriber base in India. Now Google wants to invest in Idea Vodafone. Telecom as a sector has got a boost due to the COVID scenario. More investment in infrastructure – wireless and wireline alike is required for the future given the massive growth in digital traffic. The Tech Giants may want to have a say in such Telco in the future as their products run on top of that infrastructure.”
Saurabh Chakravarty, Customer Life-cycle Management & Alliance Head, Ex-Vodafone said, “I can sense soon Telecom Golden Days will be back and COVID 19 will be playing a very important role in this transition. Post-COVID most of the things will be Digital-based starting from Shopping to Payment to Entertainment. Companies are preparing for more interactive Digital platforms for the consumer when they hit the market once the lockdown is over so that consumers spend less time interacting face to face and pass there order without any touch. If we check the recent industry data Only Online Shopping, Digital Payment, OTT Usage (entertainment) to name few have grown exponentially and going forward consumers will believe more on 5″ inch screen than anything else in the world. And medium for all this will be Telecom Pathway.
Murthy BJAS, Business Leader & CEO, FMCG said, “Exciting news for the Telecom Industry and a rather an icing on the cake for VIL. The future will still be challenging for the VIL but with a partner like Google, anything can be possible.”
Chaitanya Chinchlikar, Vice President at Whistling Woods International stated, “Google looking at investing 5% in Vodafone Idea India. Deal size unknown. Microsoft looking at a US$2bn investment in Jio. % not yet known. I am not surprised, though… In a depressed global economy, if someone were to ask where value is likely to be realised for one’s investment in the next decade, without a doubt, the answer at the top of the list is India. Facebook last month announced a $5.7 billion investment in Vodafone Idea’s rival Jio Platforms, which houses the digital assets of Reliance Industries Ltd.”
Vodafone Idea owes the Indian government ₹53,000 crore in balanced net income contribution. It posted misfortunes of ₹6,453 crore in the December quarter. Revenue in the period rose 2.26% to ₹11,089.4 crore, much appreciated to 4G customer additions and average income per user.
Whereas all-inclusive Microsoft, at the side Amazon Web Services rules the on-demand cloud computing stages and application programming interface commerce, it faces a three-way battle in India, including Google Cloud. All of these suppliers are quickly attempting to reach the market of ‘new to digital’ businesses, legacy undertakings and the ability pool required to run it, and a partnership with a telco can get to millions of subscribers.