Reliance Jio and Bharti Airtel: who’s selling? Who’s buying?

Reliance Jio and Bharti Airtel: who’s selling? Who’s buying?

The massive investment from Abu Dhabi’s Mubadala in India's Jio Platforms has been confirmed – but will rumours of an Amazon purchase of a stake in Bharti Airtel also prove true?

Abu Dhabi’s sovereign wealth fund Mubadala is to invest $1.2 billion – an almost 1.9 per cent stake – in India’s Jio Platforms, the company that owns India's largest mobile network operator Jio and a number of other digital businesses.

According to the UK’s Financial Times newspaper this means that US private equity firms Silver Lake, Vista Equity Partners, General Atlantic and KKR have all taken stakes in the group since Facebook invested $5.7 billion in April.

Nearly a fifth of Jio – worth about $11 billion – has now been sold and the buying spree is not over yet; Saudi Arabia’s Public Investment Fund is said to be discussing an investment. 

Plans to reduce Reliance’s net debt from over $20 billion to zero by March next year seem to be on course following these investments – and last week’s $7 billion rights issue, which was India’s largest ever. 

How will Jio’s competitors respond? This site, like many others, has spent much of the past 24 hours assessing a Reuters exclusive: that Amazon is in talks to buy a $2 billion stake in Indian operator Bharti Airtel. The story comes hard on the heels of similar rumours that Google is exploring an investment in Vodafone Idea, India’s third big operator.

Reuters cites a number of informed but unnamed sources in its story about a planned investment that would give Amazon about five per cent of the current market value of Bharti. It made it clear, however, that talks between Bharti and Amazon are at an early stage and that everything could change.

These developments are surprising in some ways. India is a very difficult market for operators: only three major names have survived in the highly competitive climate of recent years. And the regulatory environment has not always been favourable. High AGR dues and (arguably) overpriced spectrum are proving a drain on many company’s finances or delaying investment in next generation networks and services.

Meanwhile, consumer interest is hard to predict. There has been a growth in the use of communications services during India’s lockdown but longer-term consumer expenditure may be hit by wage cuts or job losses due indirectly to the coronavirus. Nevertheless, the potential of India’s digital economy – and of its vast market – seems to be undimmed for investors.

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