India's Telecomtikoon Mukesh Ambani and Sunil Mittar have struck separate deals within hours, bringing Elon Musk's Starlink to the world's most populous country, deepening alliances between New Delhi, Washington and politically connected businessmen.
On Wednesday, Ambani's Reliance Gio, India's biggest mobile operator, announced plans to work together to distribute SpaceX's satellite internet services, following two Mittal players, Bharti Airtel. The partnership will further smooth the entry into India of masks' wide range of business interests, including Tesla.
Neil Shah, co-founder of Technology Consultancy Counterpoint Research, called the deal “win-win for everyone” by avoiding harmful conflicts with the “Indian giant” and avoiding Starlink's market-leading service.
The unprecedented partnership between Musk and two of India's most powerful billionaires – a fierce rival who exerts greatest control over the country's huge telecom market – was seen as another indication that they would work with Donald Trump's administration to facilitate barriers to investment and mitigate the threat of local tariffs on the US president.
“This is how we talk to the US in India to 'Let's work together',” said Vivekanand Subbaraman, an analyst at Ambit Capital in Mumbai. “It was very clear that Musk had a lot of influence on the US government, and he's taking advantage of that.”
Rather than allocated Prime Minister Narendra Modi's government as much as Musk wanted, the rapid succession of announcements surprised industry watchers due to the unexpected detente between the trio.
People close to the Indian group had previously told the Finance Times that they were worried about allowing Musk to establish toes in their backyard. However, in signs of warming, Mathew Oommen, group chief executive of Reliance Jio, called the collaboration with SpaceX “a transformational step towards a seamless broadband connection for everyone.”
The partnership follows a meeting with Modi with Trump in Washington last month, where he also held talks with Musk on technology, space and innovation.
“These transactions take a sweet time,” said a Mumbai banker who doesn't want to name them. “It's very strange that both of these aren't stagnant at the same time.”
India's Foreign Ministry did not immediately respond to a request for comment.
Also, the commercial order may have spurred Musk as it approaches India's dominant communications players as it has been delayed in regulatory approval of Starlink, a planned satellite service by its local counterparts.
Many foreign companies, including General Motors, Ford and Vodafone, are shocked in India and narrowed down to deep-rooted domestic competitors, changing regulatory hurdles.
“Elon Musk could have built his own distribution and office, but that's tough to do and expensive,” said Subbaraman of Ambit Capital. “Looking at these partnerships, Elon Musk has visibility from day one. They need distributed muscles to reach consumers.”
After signing a contract with Bharti Airtel a day ago, SpaceX president and chief operating officer Gwynne Shotwell said Wednesday that the US company “looks forward to working with Jio and receiving approval from the Indian government.”
The joint venture could also help smooth New Delhi security concerns so that Starlink can operate in India's sensitive border regions, which it shares with China and Pakistan.
Analysts believe that Satellite Internet will primarily find a market in remote regions of India given the widespread availability of cheap 5G services already deployed nationwide with 1.4 billion people. Despite fanfare about alliances between billionaires trioes, industry experts have made commercial promises of the internet nurtured in Indian spaces.
Although the country has over 1 billion active mobile users, Axis Capital analysts have flagged the relatively low level of a 41mn fixed broadband subscription. Starlink's premium pricing in countries with per capita GDP below $3,000 means “it's unlikely to become mainstream in India.”
A person close to Reliance said details about Starlink's pricing and deployment would be “time-consuming.”
Starlink entries can also clear the way other Musk companies branch out in the world's fastest growing major economies.
Tesla recently touted its multiple India-based role, suggesting it is preparing to sell electric vehicles in the South Asian country despite Trump's lightly parading Musk's chances of establishing an automobile factory in India last month, saying it was “unfair to us.”
Last year, Musk snubled Modi by suddenly canceling his trip to India in support of signing a deal in China. Still, billionaires complaining about the country's high tariff barriers remain committed to the construction of Tesla plants in India in the long term, the FT reports.
“It's definitely one of the items on the Indian government's agenda,” the Mumbai-based banker said of attracting marquee investors.
“At the same time, India has power in the automotive sector,” they added. “I don't think I'll ask them to come to Musk. His vehicles are very high-end and will command a small market catchment.”
Additional Reports by Krishn Kausik of Bengaluru
