Financial Insights

Google to invest around $1 billion in Bharti Airtel

Bharti Airtel, India’s second largest telecom operator by active user base, announced will invest $1 billion in the company as a part of the tech giant’s Google for India Digitization Fund of $10 billion. The deal includes google spending $700 million to acquire 1.28% stake in the company and balance in future potential commercial agreements.

This is google’s second investement in an Indian telecom company, the first being Reliance Jio. The shares will be issued to Google at a preferential basis at Rs 734 per share, a premium of 2.5% from Airtel’s stock in the market. The main areas of concern for the balance $300 million will be affordable mobile devices, 5G network and cloud technologies.

“We see a potential re-rating upside in both the India and Africa businesses on the back of steady earnings growth in each region from a tariff hike, ARPU mix improvement, and market share gains. We see an additional EBITDA potential of ₹100b if VIL is unable to infuse large-scale capital and improve its ARPU/revenue to sustainable levels,” said analysts at brokerage firm Motilal Oswal.

After the announcement, the share touched a high of Rs 754 per share before slumping back down. Today the share climbed 1.89%.

Highlight by Aman Agarwal.

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