Bharti Airtel, one of India’s communication companies, has announced that Google is making a $1 billion investment as part of a partnership that will expand affordable access to smartphones. In exchange, Google secures a 1.28% ownership stake in the Indian company and multi-year commercial agreements.
Broken down, $700 million of the total will be used as an equity investment in Bharti Airtel at a price per share of INR 734 while the remaining $300 million will go towards implementing commercial agreements. Despite the companies having agreed between themselves on the terms of the deal, it will still be subject to scrutiny from the country’s regulators.
Sundar Pichai, CEO of Google and Alphabet, said:
“Airtel is a leading pioneer shaping India’s digital future, and we are proud to partner on a shared vision for expanding connectivity and ensuring equitable access to the Internet for more Indians. Our commercial and equity investment in Airtel is a continuation of our Google for India Digitization Fund's efforts to increase access to smartphones, enhance connectivity to support new business models, and help companies on their digital transformation journey.”
Fundamentally, both companies will benefit from this deal. The lower cost of devices will help Bharti Airtel get more customers who will go on to top up their phones each month and Google will benefit as more people will be online to interact with its services and ads.