Will Google’s interest in Vodafone create the next big tech-telecom partnership in India?

According to industry analysts, the Technology-Telecom business is becoming more hybrid on the back of traditional models

e4m by Dipali Banka
Updated: Jun 1, 2020 9:10 AM
Digital

Google has been reportedly in talks with Vodafone Idea for buying a 5 per cent stake in the second largest telecom operator in India. However, Vodafone Idea on Friday clarified with the Bombay Stock Exchange that it is evaluating various opportunities but there is no proposal before the board of the firm as yet.

“As part of corporate strategy, the Company constantly evaluates various opportunities for enhancing the stakeholders’ value. As and when such proposals are considered by the Board of Directors of the Company warranting disclosures, the Company shall comply with the disclosure obligations,” said the company in its statement to the Bombay Stock Exchange. “Currently, there is no proposal as reported by the media that is being considered at the Board,” it said.

The share price of Vodafone Idea was up 12.93% to Rs 6.55 on the National Stock Exchange on Friday.

Although Vodafone says the board is yet to receive a proposal, a potential deal with Google is likely to be a shot in the arm for the beleaguered Vodafone Idea Limited which has a current net debt of Rs 1.03 lakh crore with over Rs 51,000 crore of balance AGR dues. After paying the principal amount, Vodadfone’s AGR dues stand at Rs 21,533 crore.

Google’s potential investment in Vodafone will reportedly further heat up the race to create the next big connected digital ecosystem in India. According to an analyst, the Technology-Telecom business is becoming more hybrid on the back of traditional models.

“Might be worthy to note that Vodafone Idea Limited, like Bharti Airtel and Jio Platforms, has aims to expand its business beyond Connectivity and into 5 other areas including Content, Community, Commerce, Currency and Capital. We at Greyhound Research term this as, “The 6C Digital Platform Matrix”,” says Sanchit Vir Gogia, Chief Analyst, Founder & CEO of Greyhound Research in his report on the potential deal of Google with Vodafone Idea.

“Google that has been working closely with the Bharti Airtel enterprise team for a few years now. Both have invested in training Bharti Airtel’s workforce to sell Google Suite to its enterprise customers. However, the relationship has been only reasonably successful and has failed to yield exponential returns for both,” says Gogia. “Having said that, given the troubled state of affairs at Vodafone Idea Limited, Google may well end up with a sweet bargain which would be an impossible feat with Bharti Airtel. The company has known to be in a critical state since late 2019 given the need to pay additional statutory dues as per the court orders. The money coming into VIL via a stake sale to a strategic partner can go a long way in helping it tide over these uncertain times,” he adds in his report on the company blog.

India with the world’s second largest internet market with more than 600 million users is a huge potential market for telecom and technology giants. In recent weeks, Jio Platforms acquired investment of Rs 43,574 crore from Facebook. With the partnership with Jio, Facebook will be hoping to use its newfound presence in the local market to fuel more business activity via WhatsApp, and Facebook, which will incorporate broader expansion of Indian eCommerce platforms like Meesho, which Facebook also acquired last year. This will also mean that Jio will get access to Facebook’s data and vice-versa, and will take the verticals of entertainment, e-commerce, education, etc to another level.

For more updates, be socially connected with us on
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube