Google plans to take 5 percent stake in Vodafone Idea Ltd: Report

Google is exploring the idea of picking up stake in Vodafone Idea Limited. The search giant is said to be considering the purchase of 5 percent stake in Vodafone’s struggling India business. Vodafone Idea Limited is a partnership between UK-based Vodafone and India’s Aditya Birla Group. Since the launch of Reliance Jio in 2016, both the companies have been struggling, which also led to their merger. The discussion is said to be at a very early stage.

According to Financial Times, Google’s move would pit the search giant against Facebook in the world’s fastest-growing mobile market. Jio Platforms, the subsidiary of Reliance Industries, has seen intense interest in the recent weeks. It has secured over $10 billion in investment from Facebook, KKR, General Atlantic, Vista Equity Partners and Silver Lake. It is also said to be in discussion with Microsoft, Twitter, Mubadala and others.

FT reports that Google has also held talks with Jio but has lagged behind its rivals in securing a deal. With an investment in Vodafone Idea Limited (VIL), Google will provide a much needed stimulus to the struggling telecom player. Analysts see the investment as a lifeline for VIL to continue operations in the country. The report also notes how Silicon Valley is now looking to secure a foothold in India, where telecom operators have hundreds of millions of subscribers.

Google already dominates in the India’s mobile market with its Android operating system. However, it has struggled to deliver a version designed for emerging markets and cheaper devices. With the adoption of its payments service – Google Pay – reaching a critical mass, Google is looking for more investment in the market. With anti-China sentiment, the US tech giants could easily make sweeping investments in India’s telecom market.

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The government tightened restrictions on Chinese foreign direct investment last month. With Chinese market becoming less viable, the US tech companies and PE investors are looking at Indian companies as an opportunity. While VIL and Bharti Airtel have come under pressure from Reliance Jio, their fortunes have improved recently. After the three players raised prices last year, the playing field has leveled. With fresh investment from Google, VIL can sustain this tide.

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