In a first, Google Inc is all set to become the first foreign company to invest in India's top two biggest mobile network providers in terms of subscriber base – Jio and Airtel. Airtel will partner with Alphabet-owned Google Inc, wherein the latter will buy a 1.28% stake in the telecom network for Rs 5224.38 crore, it said on Friday in a regulatory filing. Google will also invest more than Rs 2,000 crore in other offerings aimed at accelerating digital inclusion across India.
This comes just seven months after Google acquired a 7.73% stake in Jio for Rs 33,737 crore. The Google - Airtel deal will focus on enabling affordable access to smartphones across price ranges, which was also one of the objectives behind the Google-Jio tie-up.
Analysts have reservations about the move.
"Traditionally, networks haven't done well at producing phones, and Google's track record isn't stellar either. So one shouldn't be too optimistic about the devices that will come out of this; but certainly, with their distribution might, they are well-positioned to make any handset popular. There is still a large untapped feature phone market in India that is ripe for going smart," said Utkarsh Sinha, managing director of boutique advisory firm Bexley Advisors.
As part of this collaboration, the companies will also partner with various device manufacturers to explore opportunities “to bring down the barriers of owning a smartphone across a range of price points,” the filing added.
Among other things, Google and Airtel will explore India-specific use cases for 5G. They will also focus on accelerating the cloud ecosystem in India by building on Airtel’s network of one million small and medium businesses to speed up digital adoption.
Sinha also pointed out the concerns that arise from this collaboration, "Whenever an ISP gets too close to an internet giant, one's antennae need to tickle sensing the long term implications, particularly around net neutrality. That is sacrosanct for continued innovation and must be preserved at all costs."
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