Vodafone Idea board’s “clarification” on a story broken in this paper that online retail and web services giant Amazon can invest maximum The Rs 20,000 crore debt and equity in the struggling telco needs to be carefully analyzed by Vodafone Idea. The clarification states that the Board is “at present” not considering any such proposal. He did not say that he would not consider such a proposal in the future, or had considered a proposal in the past that may or may not wait for some other development to occur before it becomes fruitful.
The ‘other development’ of course is for the government to convert VI’s dues into equity. As part of its relief package to struggling telecom companies, the government had offered to convert their dues 16,133 crore in equity, which was approved by the VI board in January.
That deal, which would make the Indian government the largest shareholder in India’s third-largest telecom operator by subscribers, is expected shortly. It was only then, as VI Managing Director Ravinder Takkar admitted in an interview last week, that the company’s plan There may be a plan to raise funds of 20,000 crores.
VI Of course, there is a dire need of cash to bid for 5G spectrum in the upcoming auctions. Without funding brought in by Amazon or any other potential investor, it would be unable to bid for spectrum, and without 5G spectrum, it could say goodbye to any long-term prospects of staying in the market.
Oddly, that same alpha-numeric combination also explains why Amazon, whose core business is in e-commerce and cloud computing services, should consider investing in a telecom operator. And no, it doesn’t make for backward integration with its logistics operations, although it will come in handy, as Amazon increasingly uses the Internet of Things (IoT) to automate its warehousing and logistics operations using robotic and drone technology , for which 5G networks are important. ,
Amazon, like all cloud service providers, is eyeing terrestrial networks to seamlessly connect its cloud services with its enterprise customers. In fact, Amazon’s Kuiper – its ambitious plan to offer satellite-based broadband through a network of low-Earth orbit satellites – has struck an agreement with global telecommunications giant Verizon to use Kuiper Systems for 5G backhaul. has done.
India, as one of the world’s fastest growing economies and with the world’s fastest growth in data consumption, is critical to the plans of all major cloud players – whether Microsoft, Meta or Google. And importantly, both Meta and Microsoft have made major investments in Jio Platforms, while Google plans to follow up on its 33,000 crore investment in Jio and up to $1 billion investment in Airtel.
The reason the big tech players are banging a way on the door of telcos is because India – unlike most other 5G operating countries that have allowed non-telecom entities to own 5G spectrum and operate 5G networks – Has made Telecom the only operator of 5G network. This means that anyone who wants to use the 5G network will have to go through the telco.
Of course, this is a huge business opportunity for telecom companies to generate revenue. But offering only commoditized 5G network services will only get you so far and so far. Deep integration with deep tech companies provides an opportunity to unlock the value offered by 5G.
And in India, with rivals Reliance, Facebook and Google already tied up with telcos, Amazon only has VI as an option – apart from the prospect of a partnership with ailing state-owned BSNL – if that party. wants to join.