According to a report by Reuters, Amazon is in talks with Indian telecom giant Bharti Airtel over a potential investment. If the deal finalizes, the eCommerce giant would invest around $2 Billion into Airtel’s business and get a 5% stake in return, the sources said.
This makes Amazon the third big US-based company to seek investment in Indian telecom companies in recent months. Previously, we heard about the Facebook-Reliance Jio deal, which was followed by the Alphabet Inc. exploring investment opportunities in Vodafone Idea Ltd.
The news comes at a time when the Indian economy, along with other nations, is on a downhill owing to the Coronavirus pandemic, and potential foreign investments could give it a much-needed boost.
Right now, the talks are in the early stages, and it’s possible that the deal may not come to fruition. Both Amazon and Airtel have declined to comment on the matter.
However, according to the report, a backup plan could be in place if the deal doesn’t finalize, where Airtel customers could enjoy discounts on Amazon’s products.
Speaking of Amazon, the company already has a strong foothold in the online shopping market in India. But it can leverage Airtel’s vast network of offline stores to promote its hardware, including Echo-branded smart speakers. Also, Airtel’s fiber network could help Amazon cut down the costs of its cloud services such as AWS.
The Indian telecom space saw a major shift after the arrival of Reliance Jio. With its pan-India 4G network, the company literally showered unlimited free internet on the Indian population. But this has also brought problems for existing telecom players.
While major telcos like Bharti Airtel survived the storm, smaller ones either had to shut down or merge with others, as we saw in the case of Vodafone’s acquisition of Idea. Once leading the pack, currently, Airtel is the third largest telecom company after Reliance Jio and Vodafone Idea.
In addition to telecom, Jio is stepping into other areas as well. The list includes an online shopping platform called JioMart, where the company is selling groceries and competes with established players like BigBasket and Grofers.