Tech giants Amazon is believed to be considering a major $2 Billion buy of stakes in India’s big telecom company Bharti Airtel that would see it having 5% shares of the company considering the company’s current valuation.
The rumour comes courtesy of Reuters, which has had a word with no less than three people who reckon they’re clued up on the situation. The sources say Amazon is in early-stage talks to buy a stake worth at least $2 billion in Indian mobile operator Bharti Airtel.
That would equate to around 5% of the company, although it seems Amazon could double that investment if it finds the deal worth it. The investment would give India’s third-largest telecoms company a boost as it seeks to compete against the number one player Reliance Jio.
Why is Amazon planning on a major investment in Airtel?
While the Indian telecoms market is arguably the number one growth opportunity in the global market, the operators left standing are all in a lot of debt. That, combined with the depressed value of assets thanks to the coronavirus-induced global recession means there are some great investment opportunities. Not only do they offer potential capital growth, but having a piece of the action also grants access to billions of Indian punters.
Which explains why US internet giants are showing such an interest. In April Facebook chucked $5.7 billion at Reliance Jio and last week it was reported that Google is having a sniff around the Vodafone idea. While all this cash will doubtless come with major strings attached, this is probably good for the Indian telecoms sector as a whole as it should enable the operators concerned to accelerate their network rollout plans.
“Jio has transformed itself from a pure mobile operator to a digital technology-led consumer-facing platform, and Airtel can do the same,” said one of the people. “Airtel is looking to play a catch-up game here, and for Amazon, it makes all the strategic directional sense for the Indian business.
Amazon had been mulling several investment options, including buying a stake worth up to 8-10%, a second person said. The talks between Bharti and Amazon are at an early stage and the deal terms could change, or an agreement may not be reached, said two of the three people, all of whom declined to be identified because the discussions are confidential.
Author: Moses Echodu
Moses is an avid Sports and Tech enthusiast. He loves to keep up to date with all the latest information and research on some of the most compelling stories.