Google LLC Google explores Vodafone Idea stake as part of India push Investment in struggling venture could pit search group against Facebook and Reliance Google’s interest in Vodafone Idea highlights the broader appeal of India's mobile market © BLOOMBERG NEWS Benjamin Parkin in New Delhi, Anjli Raval and Nic Fildes in London, Richard Waters in San Francisco 12 MINUTES AGO Google is exploring an investment in Vodafone’s struggling India business in a move that could pit the US internet group in a battle against Facebook for the world’s fastest-growing mobile market, according to people familiar with the matter. One of the people said Google was considering buying stake of about 5 per cent in Vodafone Idea, a partnership between the UK telecoms company and India's Aditya Birla Group that has been under severe financial strain. Another said the process was at a very early stage. Any push by the Silicon Valley-based company into India would come against a backdrop of intense interest in the country’s booming mobile sector. Reliance Industries’ Jio — owned by Asia’s richest man Mukesh Ambani — has in recent weeks secured more than $10bn in investment from Facebook and private equity groups including KKR, General Atlantic, Vista Equity Partners and Silver Lake. Google parent Alphabet has also held talks about acquiring a stake in Jio but has lagged behind its rival in securing a deal. Pursuing Vodafone Idea instead would potentially pit Google against Facebook and an increasingly dominant Jio but the company could also make multiple investments in India. Google’s effort to follow Facebook in securing a foothold in India highlights the appeal of the country, where telecom operators enjoy hundreds of millions of subscribers each. Even as India’s two-month coronavirus Jio was able to attract this money first; now everyone else wants to play catch-up Anshuman Mishra lockdown upends economic activity, many of these users are consuming more mobile data than ever before as well as turning to services such as digital payments and online shopping in increasing numbers. But US companies have faced competition from Chinese investors. Rising anti-Beijing sentiment in India linked to coronavirus prompted New Delhi last month to tighten restrictions on Chinese foreign direct investment. “There aren't that many options for big foreign tech companies to invest in India,” said Anshuman Mishra, who advises Asian corporations on strategy. “Jio was able to attract this money first; now everyone else wants to play catch-up.” Google has long harboured ambitions for India. It has pushed its Android mobile operating system in the country, though an effort to launch a version tailored for emerging markets had mixed success. But its mobile payments service has grown rapidly since its 2017 launch in the country, becoming one of the most popular in a crowded field. For Vodafone Idea — the product of a 2018 merger between Vodafone and Birla's Idea — an investment by Google could boost the likelihood of its survival. Its future has been uncertain since India’s Supreme Court ruled in October that it owed billions of dollars in retrospective fees, prompting Birla to state it might “shut shop” altogether. Vodafone has described the financial position of the joint venture as “critical” but refused to inject more equity, having booked billions of pounds of losses related to its Indian foray. Last year it wrote off the entire value of its Vodafone Idea stake. Vodafone Idea’s issues stem partly from a price war that followed the 2016 launch of Jio, which saw the company offer cheap contracts in an attempt to gain market share. Vodafone Idea, Jio and Bharti Airtel are India’s only remaining private operators, following a wave of consolidation. However, the prospects for India’s mobile sector have improved after the three companies raised prices late last year, which analysts say should help shore up revenues. On Tuesday, Bharti Airtel's parent raised $1.1bn in a share sale after the company’s stock price hit an all-time high. Google, Vodafone and Birla declined to comment on any potential investment. Vodafone Idea did not respond to a request for comment. Copyright The Financial Times Limited 2020. All rights reserved.
