Brokers see up to 30% upside as Google buys telecom stake

Google will invest up to $1 billion in Bharti Airtel as the US tech giant expands its grip in India. The investment is part of Google’s plans announced less than two years ago to inject $10 billion into India through its digitization fund over five to seven years through equity deals and mergers.

Google International LLC will buy a 1.28% stake in India’s second-largest telecommunications service provider for $700 million and invest $300 million over the next five years in commercial deals in affordable mobile devices, 5G network and cloud technologies.

“We see business upside potential in India and Africa through steady earnings growth in each region driven by higher pricing, improved ARPU mix and market share gains. We see additional EBITDA potential of 100b if VIL is unable to inject large-scale capital and improve ARPU/revenue to sustainable levels,” Motilal Oswal analysts said in a note. call on Bharti Airtel shares with a target price of 920.

Bharti could leverage Google’s technology platform to explore monetizing its digital offering. It could capitalize on the opportunity of a large number of feature phone subscribers in the market via affordable Google-enabled devices, and leverage Google’s 5G technology solutions to deliver SMB/consumer use cases , including cloud services. Over time, it can derive great value through new areas of growth, depending on the brokerage.

“We believe this partnership will significantly enhance Airtel’s ability to capture a high share of non-telecom incremental revenues, such as cloud services, data centers and Industry 4.0 implementation. We remain enthusiastic about Airtel as we see it as a key beneficiary of digitalization trends,” Ambit Capital said in a note. 931 each.

The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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