Amazon in early-stage talks to buy $2 billion of Bharti Airtel stake

Amazon.com is in early-stage talks to buy a stake in mobile operator Bharti Airtel worth at least $2 billion, three people with knowledge of the discussions, in a move that could turbochargate India's digital economy. The proposed investment, if completed, would mean that Amazon would acquire a stake of around 5% based on Bharti 's current market valuation and would give India's third-largest telecommunications company a boost as it tries to compete against Reliance Jio, the number one player.

"Jio has transformed itself from a pure mobile operator into a consumer-facing platform running digital technology, and Airtel can do the same," one of the people said. "Airtel is looking to play a catch-up game here, and for Amazon it makes all the strategic tactical sense for the Indian company. Amazon had multiplied multiple investment options, including buying a stake of up to 8-10 %," said a second person. "The talks between Bharti and Amazon are early and the terms of the deal could change or an agreement could not be reached," said two of them.

If talks to buy a stake collapse, a commercial deal that could give Bharti's customers cheap access to Amazon goods could also be looked at by companies, one of the people said. An Amazon spokesperson said that the company "does not give updates on rumors on what we can or cannot do in the future. Bharti said that they actively collaborate with all digital players to introduce their goods, content and services to consumers. "Beyond that there is no other activity to announce," she said in a statement. Shares in Bharti closed 3.8 % higher after rising to 6 % on news. The broader NSE Nifty 50 index closed down 0.32%.

The Amazon-Bharti discussions underline India 's digital economy's attraction to U.S. tech giants. Jio, Reliance Industries' digital arm, has raised $10 billion from global investors over the past six weeks, including Facebook, as it aims to develop itself as a one-stop digital commerce platform.

Google's Alphabet Inc is also considering an investment in Vodafone Idea, a joint venture between Vodafone Group Plc in Britain and Idea Cellular in India, the Financial Times announced last week. Vodafone Idea is India's second-largest telecoms service, where the lockdown of coronavirus has led to a rise in demand for online shopping, entertainment and data. Amazon regards India as a critical growth market where it has invested $6.5 billion mainly to broaden its e-commerce footprint. Via its voice-activated speakers, video sharing, and cloud storage, the Seattle-based company has also expanded its digital offerings in India as it aims to tap a growing number of Internet and smartphone users in the country of 1.3 billion people. A deal with Bharti could help Amazon expand its offerings through its smart speakers and also boost its cloud business as access to the vast telecom fiber network of Bharti could help lower costs for Amazon. Jio of Reliance has already collaborated with Microsoft to use its Azure cloud platform.