A case for Amazon to invest in Vodafone Idea

There is a very strong case for Amazon to buy a stake in Vodafone Idea. Tomorrow’s fundraising board meeting for about USD 4 billion might just make some announcement.

Amazon has been interested since long. With over 90 per cent of the world’s Internet advertising revenue pocketed by Google and Facebook, the heat has been on within Amazon to plug in the only missing gap, voice. With its marketplace as well as other services such as Amazon Prime Video, Amazon Pay and voice offerings such as Alexa, the American tech giant has been keen to give the platform business a new dimension in India, not forgetting  the repository of data it will be able to plunge into.  Facebook and Google have a foot-in-the-door with a 9.9 per cent and 7.73 per cent stake in Jio Platforms respectively.

On June 4, many dailies reported that Amazon is in dialogue with Bharti Airtel regarding a USD 2 billion investment for a 5 per cent stake in the Indian operator. Bharti however dismissed this news, on June 5 as speculative. On August 5, a partnership between Amazon and Bharti Airtel was made to sell a wide-range of AWS offerings under Airtel Cloud brand to small, medium, and large-sized businesses in the country.

Way back in 2019, Amazon had expressed interest in buying Sprint’s Boost Mobile prepaid wireless brand and any wireless spectrum divested from either carrier in the US.

Fundraising mandatory for Voda Idea. Vodafone Idea has been weighed down by eight straight quarterly losses and over USD 14 billion of debt. Vodafone UK has signalled its unwillingness to invest any more money into its India unit. The Supreme Court has rejected its appeal for a 20-year payment plan. Looming 5G investment and operational underperformance leave the operator with not too many options.

The  firm has informed the BSE that the meeting of the Board of Directors of the company scheduled on September 4, 2020 is to consider, evaluate and approve any and all proposals for raising of funds in one or more tranches by way of a public issue, preferential allotment, private placement, including a qualified institutions placement or through any other permissible mode and/or combination thereof as may be considered appropriate, by way of issue of equity shares or by way of issue of any instruments or securities including securities convertible into equity shares, Global Depository Receipts, American Depository Receipts or bonds including foreign currency convertible bonds, convertible debentures, warrants, and/or non-convertible debentures including non-convertible debentures along with warrants, which may or may not be listed.

Now that there is some clarity on its AGR payment timelines, raising funds may become easier.

Possible investors. Amazon is not the only one interested. Verizon has also been keen to get a slice of the Indian telecom pie. It is present in India through its media and online unit Oath Inc. The US wireless carrier has also partnered with Bharti Airtel Ltd in the past and, most recently, in July, when it launched the BlueJeans video-conferencing service in India to serve business customers.

Jeff Bezos, with his speedy decision-making power, financial prowess and an existing USD $6.5 billion investment in India seems to be the most likely candidate!
CT Bureau