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Amazon joins in the Indian Telecom Party
First it was Facebook that invested nearly 10% in Jio Platforms, the company that runs Jio, India’s largest telecom network. Then, reports started suggesting that Google was interested in buying a 5% stake in the rather troubled Vodafone-Idea. That left Bharti Airtel, once India’s largest mobile telephony network, as the only major player without a “technology partner".
With Microsoft having already struck a partnership with Jio (that allows the latter to resell Microsoft 365 and Cloud services, among others), and in talks to invest $2Bn in the market leader, that left Amazon and Apple among large American tech companies without an interest in India’s telecom sector.
Apple was always highly unlikely to take sides in the telecom industry, so that left Amazon. And TechCrunch reports that Amazon has obliged, strarting talks to invest $2Bn in Bharti Airtel.
The e-commerce giant, which has invested over $6.5 billion in India, is in early-stage talks to buy a 5% stake worth at least $2 billion in Bharti Airtel, the third-largest telecom operator in India, according to unnamed sources cited by Reuters.
The TechCrunch report goes on to say that Airtel already has a deal with Google Cloud, so this proposed investment by Amazon (the world’s largest cloud services provider) makes things interesting, to say the least.
Further, a report in Mint suggests that these partnerships with technology companies could also be seen from the lens of e-commerce services, with Amazon, Facebook and Google each having a strong interest in the sector.
Airtel could also benefit from Amazon’s purchase-level insight due to its e-commerce services.
“From an India perspective, ...between Facebook MarketPlace, Google Shopping and the Amazon marketplace, the latter has the maximum purchase-level insight," said S. Swaminathan, chief executive and co-founder of Hansa Cequity, a digital marketing and analytics firm.
Unlike Western markets, India never went through the phase where telecom services came bundled with devices, with devices and services being sold separately, largely from unorganised stores. In this backdrop, it is interesting that Indian telecom companies are entering into partnerships with large technology companies, either for e-commerce or cloud services.
Overall this presents a remarkable turnaround for India’s once-beleagured telecom industry. Already stung by Jio’s entry to the market at ultra-low prices, and an unfavourable tax ruling that has ordered Airtel and Vodafone-Idea to pay billions of rupees in license fees, the Indian telecom industry was on the verge of collapse before the Covid-19 induced lockdown happened.