Google reportedly interested in buying 5% stake in Vodafone Idea

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This would be great news for the struggling mobile operator, and counter recent oversea investments in disruptive rival Jio, including by Facebook.

Vodafone Idea’s future has looked uncertain for some time but especially since last October, when the Indian Supreme Court ruled it must pay over Rs 51,000 crore (about €6.3 billion) in so-called adjusted gross revenue (AGR) dues to the government, with whom it has been locked in tax-related disputes for years.

Spiralling costs

As Vodafone Group’s CEO, Nick Read has noted a number of times, less than a sixth of this total is the principal – the rest has accrued from penalties, fees and interest.

The Indian government’s attempts to soften the blow and improve payment terms after Vodafone threatened to close down the opco unless it was offered better conditions were severely criticised and overturned by the court.

Some relief was found in April that enabled the company to continue operating, but is no solution to longer term difficulties.

Volatile if huge market

Vodafone Idea was created in from a merger of Vodafone India and Idea Cellular agreed in 2017 better to withstand the massive disruption caused in the Indian mobile market by the arrival of Reliance Jio in 2016, with its superior 4G services and rapid service activation

The reported interest by Google is just the latest in a flurry of activity around the Indian market. Jio is backed by the business empire of Asia’s wealthiest individual, Mukesh Ambani.

In recent weeks Jio has attracted more than $10 billion in investment from Facebook and private equity groups including KKR, General Atlantic, Vista Equity Partners and Silver Lake after Ambani embarked on mission to reduce debt.

Big tech circles

Alphabet, Google’s parent, is previously thought to have considered taking a stake in Jio and of course is not limited to investing in a single operator.

It has long shown considerable interest in one of the worlds’ largest and fastest growing markets – its mobile payments service has made good inroads since it was launched in 2017, into India’s crowded mobile payments market.

There are also reports that Microsoft is looking to invest in the Indian market.

The coronavirus outbreak has apparently led to considerable anti-Chinese feeling in India including a tightening of rules concerning Chinese investment in the country, leaving the field open to western investors.