A potential investment in Vodafone Idea by global technology giant Google will further heat up the race to create the next big connected digital ecosystem in India, analysts feel.
Google had announced a partnership with Airtel in January to extend their G-suite services to Airtel subscribers and has been working closely with the Bharti Airtel enterprise team for a few years now. However, with an investment in Vodafone Idea, Google could well be hedging its bets.
In recent weeks, Reliance Industries’ Jio Platforms — owned by Asia’s richest man Mukesh Ambani — has secured more than $10 billion in investment from Facebook and private equity groups including KKR, General Atlantic, Vista Equity Partners and Silver Lake. These announcements have also forced other telecom operators and technology companies to consider their options in India which, outside China, is the fastest growing digital services market.
“While Google and Bharti Airtel have committed substantial resources in training Bharti Airtel’s workforce to sell G-Suite to its enterprise customers and while the relationship has been reasonably successful it has yet failed to yield exponential returns for both," noted Sanchit Vir Gogia, chief analyst and founder of Greyhound Research in a report. On the other hand, some feel that given Vodafone Idea’s financial constraints, Google may win a bargain that is not possible with Airtel.
Vodafone Idea has recently launched Cloud Express Connect solution which extends secure MPLS networks to Microsoft Azure and Google. This and other initiatives, including Internet of things (IoT) and enterprise mobility, will allow Google to further exploit the synergies with Vodafone Idea’s customer base.
"One must note that while Airtel is a very strong telecom operator in India, globally the Vodafone brand still holds sway where tech companies are increasingly seeking telecom partnerships. Further, the association with a conglomerate like Aditya Birla group which has businesses across multiple sectors may be a likely driver for Google's choice of Vodafone Idea, if they are seeking a stake," Pareekh Jain, founder and lead analyst, EIIRTrend and Pareekh Jain Consulting.
Google has been investing in AI based startups to strengthen their India presence with Halli Labs in 2017 and strategic investment in hyperlocal delivery startup Dunzo which has witnessed a surge in usage since the lockdown.
According to a Morgan Stanley report released this week, analysts believe that Post ovid-19 India's online shopping population could see a sharp increase and online penetration in grocery could finally inflect as eCommerce and new entrants make a bigger push in this category and investments in segments such as gaming, edtech, healthtech, and cloud could increase. “ We believe we could see the emergence of a few large tech companies (Super Apps or category leaders) in the next 5-10 years. These developments are notably important for some of the global tech companies that are invested in India," noted the report.