Indian service providers seem to be the flavor of the season for investors. After a wave of interest in Reliance Jio, the country's biggest operator, Amazon is now exploring the purchase of a stake worth $2 billion in Airtel, a rival to Jio, according to media reports. (See Airtel's latest results are a pleasant surprise.)
The $2 billion investment would give the Internet giant about 5% of Airtel, based on its current market valuation of $37 billion. Amazon said it does not comment on speculation, in response to the recent coverage, while Airtel said it does not have any activity to report.
This comes close on the heels of a massive investment of more than $10 billion in Jio Platforms, the parent company of Jio. Several investors, including Facebook, Vista, KKR, General Atlantic and Silver Lake, have taken stakes in the over the last two months. There are also reports that Vodafone Idea is in talks with Google about a possible investment by the search engine giant, although Vodafone has denied this. (See Say hello to India's first digital service provider.)
Amazon's interest could be justified by its massive presence in India's ecommerce space, including an investment of around $6.5 billion in the country.
It is easy to understand the lure of the Indian digital market, especially amid the COVID-19 pandemic. Stuck at home to prevent the spread of the virus, Indians have flocked online for professional and personal activities, including working, banking, shopping, learning and entertainment.
The last few months have seen a massive adoption of digital products and services. A case in point is Zoom, a virtual-meeting app, which saw the number of meetings soar from just 10 million a day before the pandemic to more than 300 million a day by the end of April. Moreover, with a population of 1.3 billion people, India has only 625 million Internet users, which means that there is still significant room for growth for any digital company.
Amazon was last year in the news regarding its apparent interest in buying Boost Mobile, a prepaid mobile service in the US, from network operators T-Mobile and Sprint. It has also been collaborating on telecom technologies with companies such as Nokia, a Finnish kit vendor.
What's unclear now is whether Amazon has interest only in Airtel's Indian operations or if the operator's African subsidiaries have also caught its attention.
Regardless, in any shape, this would be Amazon's first investment in a telecom service provider.
— Gagandeep Kaur, contributing editor, special to Light Reading