US-based Amazon is reportedly in talks with Bharti Airtel to buy equity stake worth as much as $2 billion in Sunil Bharti Mittal's telecom firm, as American tech giants find growing attraction for India’s digital consumer market.
US-based Amazon is reportedly in talks with Bharti Airtel to buy equity stake worth as much as $2 billion in Sunil Bharti Mittal’s telecom firm, Reuters reported, as American tech giants find growing attraction for India’s digital consumer market. The news comes after Facebook announced a multi billion dollar deal with Mukesh Ambani’s Reliance Jio as the social media giant picked 9.99% equity in RIL’s telecom arm. A Bharti Airtel spokesperson told Financial Express Online that the company “routinely work with all digital and OTT players and have deep engagement with them to bring their products, content and services for our wide customer base. Beyond that there is no other activity to report.” Bharti Airtel has a market cap of Rs 3.1 lakh crore, and a $2 billion purchase could give Amazon about 5% equity stake in the company at the current price. Bharti Airtel share price jumped in late trading session today, ending nearly 6% up at Rs 583.25 on NSE.
Telecom sector distress in India
Major domestic telecom companies are looking to cut debt after a turbulent year due to AGR dues. Operators such as Bharti Airtel and Vodafone-Idea were also reeling under the onslaught of growing competition from Reliance Jio and saw their subscriber base shrink massively. Bharti Airtel’ promoter firm Bharti Telecom also recently sold 2.75% of its stake to pare debt. The reported equity stake acquisition by Amazon could also help Bharti Airtel cut its huge debt of $15.7 billion. Recently, Jio also signed a deal with Facebook in a move that is expected to cut its debt.
Bharti Airtel is India’s third largest telecom operator with over 300 million subscribers. While Bharti Airtel and Amazon are in discussions, the deal is not concrete as an agreement may not be reached, Reuters reported two of the three sources as saying. Amazon said that it does “not offer comments on speculation of what we may or may not do in future,” a spokeswoman said.