InvestorQ : Is Amazon really investing Rs20,000 crore in Vodafone because the latter appears to have denied the same?
prachi Patwardhan made post

Is Amazon really investing Rs20,000 crore in Vodafone because the latter appears to have denied the same?

Answer
image
sara Kunju answered.
1 month ago
Follow

That is normal that the concerned companies will deny till the deal is officially out. However, market reports suggest that the deal may be in advanced stages of negotiations. Amazon is already lagging in the race for Digital India share. Facebook and Google already have a stake in Jio Platforms. The only big FAANG stock to not have any exposure to India on the digital side is Amazon. This deal look to be made in heaven.

It is anticipated that Amazon may likely invest Rs20,000 crore into Vodafone Idea, through a mix of debt and equity. It is most likely to be a 50:50 mix of equity and debt but these details are more granular in nature and will come in much later. Amazon gets the much needed push into acquiring a telecom partner, which his critical to support its cloud initiatives. India is expected to be the fastest growing cloud market, doubling by FY25.

For Vodafone Idea, they have just got about Rs4,000 crore of infusion from the promoters and then they gave stake to the government in lieu of their AGR and spectrum charges up to a level. Vodafone Idea is now looking to raise fresh capital to bankroll its 5G spectrum bidding ambitions. That is where the much larger balance sheet and deep pockets of Amazon will come in handy for Vodafone.

For Amazon, its interest in Vodafone is more to do with their cloud ambitions in India. Globally, AWS is the largest cloud service provider with 49% market share while Microsoft Azure has just about 15.5% share. Obviously, Amazon does not want to miss the action in a fast growing Indian cloud market. It also is a good deal for the Indian government as it would be able to realize a much better valuation for its stake in Vodafone Idea.

11 Views