There is a looming partnership between Alphabet Inc. Google Class A (NASDAQ:GOOGL) and Vodafone Idea Ltd (NSE: IDEA). Reliable sources have revealed that the Indian business has been struggling to stay afloat in a fast-growing mobile market. Nonetheless, it is still early to whether or not the deal will have any long term benefits to the two companies given that deliberations are still underway. However, telecom analysts claim that it will be a win-win for both considering the timing.
But Why Is The Timing So Important And An Advantage For The Two Companies?
First, it is worth mentioning that Google has always had big ambitions for India. This is one of the countries with the largest population of first-time internet users. Hence it is a test-bed for innovations of new technology. This gives the global internet giant an upper hand once it acquires the speculated 5% in Vodafone. On the other hand, the deal is expected to boost Vodafone’s survival.
Google has been very calculative on how it enters the emerging markets. The Silicon Valley-based company has been very successful in its mobile payments service, which has been growing rapidly since it was launched in 2017. The competitive market has not swayed the service.
Pursuing Vodafone Idea Would Potentially Put Google against Facebook
Google is closely following in the steps of Facebook. The social media network has been an online good significant presence in India, with over 241 million active users. The network has been enjoying double-digit growth, but Google’s presence is likely to interfere with this.
This also comes at a time when the Indian internet industry is already contested by other online and powerful platforms, including Amazon.com, Inc. (NASDAQ: AMZN), Softbank Group Corp, and Walmart Inc. (NYSE: WMT). Additionally, it is a time when many Indians are consuming a lot of data following a two – month’s lockdown due to coronavirus. Digital transactions and online shopping activities have also increased.
Meanwhile, Vodafone has been on spot over more than $14 billion of debt and a demand for $4 billion in back fees. A recent ruling by one of the top courts in India, the wireless operator must pay the back fees within three months and failure to do so the Supreme Court would file a suit for non-compliance.