Monday Mar 27, 2023

Why Google Continues to Invest in India’s Telecom Providers

Why Google Continues to Invest in India’s Telecom Providers

In July 2020, Google made an investment of $10 billion in India’s digitalization fund and they promised to use this money within the next 5 to 7 years. Google had their own reasons to do this, after all a digital India means more people using the internet. In India the internet user base is more than 1 billion and Google plans to tap in to this lucrative market.

Earlier this year, Google announced that it will be investing more than $1 billion in Bharti Airtel. $700 million of this will go in acquiring a minority 1.2% stake in Airtel and $300 million will be set aside for commercial deals the two companies pursue together.

This is not Google’s first investment in an Indian telecom company, Google had invested $4.5 billion in Reliance Jio platforms to acquire 7.7% stake in the company and a seat on its board. But why is Google investing in India’s telecom companies?

Google has an existing 95% market share in India’s mobile phone market through its android operating system. It also has an UPI app which is number two for payments. People use Google apps religiously. Currently, there are about 350 million people in India who use feature phones and these are users who Google doesn’t have access to. However, when integrated with India’s biggest telecom providers they can quickly migrate these users to platforms where Google is ubiquitous. It is one way for Google to make more money.

Google has already launched a low cost 4G smartphone in India with Jio called Jio Phone next. According to rumors there are similar plans with Airtel to launch low cost phones. Such initiatives will steer users towards Google. Furthermore, Google is also hoping that investing in India’s telecom will give them an advantage on its cloud game as well. At the moment, Google cloud only has 10 % market share when compared to its rival Amazon AWS with market share over 35%. India’s public cloud market is expected to grow by 20 % in 2022.

As part of its deal with Google, Reliance had agreed to shift its legacy businesses on to Google’s cloud infrastructure and use the platform for its massive ecommerce website. Analysts estimate this partnership will earn Google more than $ 1 billion in profit every year making it one of the most lucrative cloud deals for the company.

As MSME’s start their digital transformation journeys in India, Airtel and Jio will be vying for their attention by providing broadband services and digital payments. But in reality while the telecom companies do the dirty work, Google could gain once again if they get their commercial strategy right. Google could become the de-facto cloud solution provider for entities making the digital transition.

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