Global technology major Google is mulling at buying around 5 percent stake in debt-ridden Vodafone Idea. Alphabet Inc that is Google's parent company is planning to buy stakes in Reliance Jio Infocomm's rival Vodafone Idea. As per a report in Business Standard, as per the current valuation of Vodafone Idea of Rs 16,724, Google may end up injecting Rs 836 crore.
The development has come after a month when social media giant Facebook bought a 9.9 percent stake for Rs 43,574 crore ($5.7 billion) in Reliance Industries Limited's (RIL) Jio Platforms. Moreover, RIL's wholly-owned subsidiary RJio has raked up investments from global private equity players including General Atlantic, Silver Lake Partners, Silver Lake Partners, and KKR.
Win-Win situation for Google and Vodafone Idea
If the deal goes ahead, it would be a win-win situation for both the companies. Vodafone-Idea that is reeling under huge debt is desperately looking to ramp up its finances to sustain. Further, as per the order of the Supreme Court, the company owes as much as Rs 54,000 crore in adjusted gross revenue (AGR) dues to the government. After mounting losses, its Chairman Kumar Mangalam Birla had said that it might have to shut shop if there was no AGR relief from the government, as it did not make sense to "put good money after bad". For the company, such prospects would be lifesaving. On the other hand, Google would get access to India's digital market at a cheaper price and could bring in its expertise in data to benefit from a growing wireless user base.
The potential deal between Vodafone Idea and Google is likely to heat up the competition in one of the world's largest and fastest-growing real data consumption markets. The data up to 31 January 2020 from the Telecom Regulatory Authority of India (TRAI) showed that India has a total of 115.6 crore wireless telephone subscribers. The net addition of users per month stands at 50 lakh. After the entry of RJio in 2016, the telecom market witnessed a consolidation due to aggressive pricing by Mukesh Ambani's company.