31 Jan , 2022 By : Kanchan Joshi
Google will invest up to $1 billion in Bharti Airtel as the US tech giant expands its hold in India. The investment is part of Google's plans announced under two years ago to infuse $10 billion in India via its digitisation fund over five to seven years through equity deals and tie-ups.
Google International LLC will buy a 1.28% stake in India’s second-biggest telecom services provider for $700 million and invest $300 million over the next five years in commercial arrangements in the areas of affordable mobile devices, 5G network and cloud technologies.
“We see a potential re-rating upside in both the India and Africa businesses on the back of steady earnings growth in each region from a tariff hike, ARPU mix improvement, and market share gains. We see an additional EBITDA potential of Rs100b if VIL is unable to infuse large-scale capital and improve its ARPU/revenue to sustainable levels," said analysts at Motilal Oswal in a note. The brokerage has a Buy tag on Bharti Airtel shares with target price of Rs920.
Bharti could leverage Google’s tech platform to explore monetization of its digital offering. It could leverage the opportunity of a large pool of feature phone subscribers in the market through Google enabled affordable devices, and leverage Google's 5G technology solutions to offer use cases to SMEs/consumers, including Cloud services. Over time it can derive a big value through new growth areas, as per the brokerage.
“We believe this partnership will greatly enhance Airtel’s ability to garner a high share of incremental non-telecom revenues like cloud services, data centres and industry 4.0 implementation. We remain gung-ho about Airtel as we view it as a key beneficiary of digitisation trends," said Ambit Capital in a note. The brokerage's Buy rating on the telecom stock comes with a target price of Rs931 apiece.
0 Comment