Amazon Shows Interest in Airtel, Eyes India Telecom Space

Reportedly, Amazon AMZN is in talks to invest $2 billion in one of India’s largest telecom company — Bharti Airtel — in a bid to acquire around 5% in it.

This shows that the e-commerce giant is aggressively eyeing the telecom space of India.

If the deal under review materializes, it will make Amazon well poised to capitalize on the growth avenues present in the booming India telecom market.

We note that the growing popularity of Airtel and its expanding adoption rate are likely to aid Amazon in establishing a strong footprint in this particular market.

Reportedly, Airtel has more than 300 million subscribers in India, which holds promise for Amazon’s prospects in this space.

Further, the latest move is in sync with the company’s commitment toward foraying into the uncharted territories that hold promise. These endeavors have been instilling investor optimism in the stock.

Coming to the price performance, Amazon has returned 33.2% on a year-to-date basis, outperforming the industry’s growth of 23.9%.

Intensifying Competition in the Promising India Telecom Space

Per an India Brand Equity Foundation (IBEF) report, the country has the second-largest telecom market in terms of total internet users. The number of internet subscribers in India is likely to double and reach 829 million by 2021.

Notably, the average rate of data usage per smartphone is 9.8 GB per month in India, per the report. Further, an increasing number of telecommunication subscribers and growing internet user penetration are positive attributes, which are contributing to the telecom market growth in the country.

Given this upbeat scenario, competition in this particular market is intensifying. Growth opportunities are alluring enough to attract foreign direct investments. Amazon’s latest move is a testament to this fact.

Further, this is more evident from Facebook’s FB latest investment of $5.7 billion to buy a 10% stake in Jio Platforms Limited — the digital arm of a massive conglomerate of India, Reliance Industries (RIL). Notably, the deal makes the social media giant the largest minority shareholder in India’s number one telecom operator.

Additionally, Alphabet’s GOOGL Google is reportedly in early talks with Vodafone to acquire a 5% stake in the latter’s India business unit — Vodafone Idea.

Meanwhile, Microsoft MSFT is reportedly negotiating with Mukesh Ambani to acquire more than 2.5% stake in Jio Platforms by investing up to $2 billion in it.

However, Amazon’s aggressive stances are likely to give a strong competition to the abovementioned companies if the deal is finalized.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote

 

Growing Investments in India by Amazon

The latest move highlights Amazon’s growing initiatives to bolster presence in India. Apart from its interest in Airtel, the company has committed an investment of $6.5 billion in India.

Further, the company has reportedly given its consent to acquire a 49% stake, comprising both voting and non-voting shares, in Future Coupons, a Future Group entity.

Additionally, the company’s acquired 49% stake in More, a food and grocery supermarket chain, is a major positive. Amazon also owns 5% in Shoppers Stop.

We believe that growing investments in India should continue expanding Amazon’s footprint in India.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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