How companies are impacted by the Google-Airtel deal

The US-based tech major Google’s $1-billion investment in Bharti Airtel might be a beneficial partnership to both Airtel and Google, but experts pointed out that the investment might not bring in any change of fortune for the telecom major. They further added that while there are synergies between the parties, execution will be key.

Recently, Airtel announced that Google will invest $700 million to acquire a 1.28 percent stake in the firm at Rs 734 per share along with investing another $300 million in multi-year commercial agreements.

While there might not be a direct monetary benefit for the telecom operator, analysts pointed out that the synergies could benefit both the companies as millions of users in tier-2 and tier-3 towns adapt to digital.

Sanjay Kapoor, Former CEO, Bharti Airtel, and Entrepreneur & TMT Adviser, said, “This does not change anything in terms of capital requirement for Bharti. This investment is more strategic in nature.” Kapoor further added that the government wants to sell its stake in Bharti Hexacom and this is just enough to buy the government stake.

Bharti Airtel has a debt of about Rs 1.66 lakh crore. The government is looking to raise Rs 7,000 crore by selling its stake in TCIL, a joint venture between Bharti Airtel and the government. This also comes at a time when the company is investing significantly in 5G, and needs to build its war chest for implementation. The investment, though timely, is inadequate to pursue its 5G strategy, which is a long-term strategy for the company.