Bharti Airtel (Airtel) on Friday has again clarified that the partnership with Google will not lead to any handset manufacturing, and as said earlier, the company will focus on partnering with mobile manufacturers to bring the costs down.

Speaking at an analysts’ call, Gopal Vittal, Managing Director and Chief Executive Officer (India and South Asia), Airtel said that the company will also continue its investment of $2.5 billion every year for capex, apart from what Google has announced on Friday.

The software giant has announced that it will invest up to $1 billion in a partnership with Airtel as part of its ‘Google for India Digitisation Fund’ over the next five years. The deal includes an investment of $700 million to acquire 1.28 per cent ownership in Airtel at a price per share of ₹734 and up to $300 million toward potential multi-year commercial agreements.

The $300 million will go towards implementing commercial agreements, which will include investment in scaling Airtel’s offerings that covers a range of devices to consumers via innovative affordability programmes as well as other offerings aimed at accelerating access and digital inclusion across India’s digital ecosystem, Airtel said. This deal will be subject to necessary regulatory approvals.

“The most important thing is to actually drive faster smartphone adoption. I think that goal remains unchanged. We’ve done well over the last two years to actually drive almost 80 million users from feature phones on smartphones. And, we will continue to actually push for that because we also know that for every smartphone user that moves from each console, we get a significant punch/ jump in the average revenue per user (ARPU), which is part of our premiumisation agenda,” Vittal said at the call.

He said that Airtel’s core investment will remain on building ecosystem handsets, data centers, and 5G network. “Airtel is already putting $2.5 billion every year in terms of capex and will continue to actually allocate capital towards several areas whether its own broadband, data centres, our 5G networks...but, even more, what this will do is actually fire up our digital agenda dramatically,” Vittal added.

Strategic partnership

Meanwhile, as a part of its first commercial agreement, Airtel and Google will work together to build on Airtel’s extensive offerings that covers a range of Android-enabled devices to consumers via innovative affordability programmes.

Under the larger strategic goals of the partnership, both companies will also potentially co-create India-specific network domain use cases for 5G and other standards, with cutting-edge implementations. Airtel is already using Google’s 5G-ready Evolved Packet Core and Software Defined Network platforms and plans to explore scaling up the deployment of Google’s network virtualisation solutions to deliver a superior network experience to their customers.

“Airtel and Google share the vision to grow India’s digital dividend through innovative products. With our future-ready network, digital platforms, last-mile distribution, and payments ecosystem, we look forward to working closely with Google to increase the depth and breadth of India’s digital ecosystem,” Sunil Bharti Mittal, Chairman of Bharti Airtel said.

In July 2020, Google had also invested ₹33,737 crore into Jio Platforms, translating into a 7.73 per cent equity stake in Jio Platforms on a fully diluted basis.

“Our commercial and equity investment in Airtel is a continuation of our Google for India Digitisation Fund’s efforts to increase access to smartphones, enhance connectivity to support new business models, and help companies on their digital transformation journey,” Sundar Pichai, CEO of Google and Alphabet, said.