International investments in the Indian telecom sector boosts economy

International investments in the Indian telecom sector boosts economy

India, the world’s second-largest telecom market, has been attracting foreign investors which paved the way for boosting the Indian economy. Top companies such as Facebook Google, Saudi Arabian Sovereign fund, General Atlantic, and Silver Lake Partners have expressed interest in Jio Platforms and Bharti Airtel, said Ram Sewak Sharma, Chairman Telecom Regulatory Authority of India, according to Economic Time Telecom.

A top regulatory official states that the recent investments made from international telecom giants in India’s telecom sector- especially in Jio Platforms and Bharti Airtel – would provide new revenue opportunities and boost the economy which could eventually propel the country’s economic growth, states ETTelecom.

“Investments from worldwide will provide new opportunities, boost the ecosystem of applications, and push innovation to drive growth for the Indian economy. These developments will help in creating new business models in the field of telecom, media, and entertainment industry”, told Sharma ETTelecom. Moreover, he added, “Currently we are working on reforming the licensing and regulatory regime to catalyze investments and innovation and promote ease of doing business. For this, the consultation paper will be released shortly”.

Back in June 18, 2020, Reliance Industries (RIL) – a technology company focused on providing high quality and affordable digital services across India – announced that Saudi Arabia’s Investment Fund (PIF) would buy a 2.32% stake in Jio Platforms for Rs 11.367 crore, according to Business Standard.

On April 21, 2020, Facebook announced its $5.7 billion investment in Jio Platforms for a 9.99% stake, according to Two hours after the Facebook announcement, Silver Lake invested $750 million in Reliance Jio Platforms. By the end of May 2020, KRR bought a 2.32% stake for $1.5 billion.  On June 5, 2020, the investor announced it would add a $400 million stake. The company now holds 2.08% of the Indian Telecom firm, according to the same report. Moreover, Vista Equity Partners paid $41.5 billion for a 2.32% stake. While General Atlantic closed an $870 million deal for a 1.3% stake in Jio.

On July 1, Bharti Airtel announced that US-based Carlyle Group would invest $235 million in its data center business Nxtra Data Limited (Nxtra) for a 25% stake, according to Financial Express.

Reuters also reported that early June, Amazon was in talks to buy a stake of at least $2 billion for a 5% stake in Airtel. On June 4, 2020, Reliance announced that Abu Dhabi’s Mubadala Investment Co. would invest about $1.2 billion in Jio Platforms.

“The advantage that these tech giants bring by collaborating with telecom companies is that they will be able to get a better understanding of local customers. Depending on their usage patterns, demographics, the geographical distribution, they can customize or innovate products for Indian consumers,” said Sharma.