Amazon looking to buy $2bln stake in Bharti Airtel as shares trade near record highs

Amazon looking to buy $2bln stake in Bharti Airtel as shares trade near record highs
Written by:
Michael Harris
5th June, 09:48
Updated: 5th June, 09:50
  • Amazon considering buying a 5% to 10% stake in Bharti Airtel, the third-largest telecom operator in India
  • Facebook invested $5.7 billion to purchase a 9.99% stake in Reliance Jio Platforms, India's biggest telecom
  • Amazon stock price testing a key resistance near the $2,500 handle

Shares of Amazon (NASDAQ: AMZN) have consolidated recent gains near the record highs as the e-commerce giant considers buying at least a $2 billion stake in the Indian telecom Bharti Airtel (NSE: BHARTIARTL).

Fundamental analysis: Amazon to follow Facebook in India’s telecom sector

E-commerce giant Amazon is reportedly in talks to secure at least a 5% stake in Bharti Airtel, the third-largest telecom operator in India, according to Reuters. Amazon’s potential investment in Bharti would provide a huge boost not only for the telecom operator but also for the entire digital economy in the world’s second-most populous country. 

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Bharti is seeking to undermine the number one telecom player Reliance Jio and gain a bigger share of the market. 

“Jio has transformed itself from a pure mobile operator to a digital technology-led consumer facing platform, and Airtel can do the same. Airtel is looking to play a catch-up game here, and for Amazon it makes all the strategic directional sense for the India business,”

Talks are reportedly still at an early stage, with Amazon also discussing an option to buy a stake up to 10% in Bharti Airtel. 

“It is clarified the Company routinely works with all digital and OTT players and has deep engagement with them to bring their products, content and services for our wide customer base. Beyond that, there is, at this stage, no such proposal in consideration,” Bharti said in an official statement

News about Amazon’s potential investment in the telecom industry came just a few weeks after it was reported that Facebook invested $5.7 billion to purchase a 9.99% stake in Reliance Jio Platforms. Moreover, it was reported last week that Google is also considering a purchase of a 5% stake in Vodafone Idea, the second-largest telecom operator in India.

Technical analysis: Amazon trading near the record highs

Despite a huge market selloff that came as a direct result of the coronavirus outbreak, shares of Amazon have made substantial gains in 2020 to trade at the record highs around the $2,500 mark. 

Amazon stock weekly chart (TradingView)

The price action has nearly tagged the Fibonacci 161.8% extension at $2,533. In the bigger picture, Amazon stock price tagged the same type of resistance at $2,500, but this time an extension of the 2018 pullback. Therefore, levels just above the $2,500 handle are likely to pose a strong resistance for the buyers going forward. 

Any pullback towards $2,200 is likely to be seen as an opportunity to invest in Amazon shares given the immense performance of the stock in the past few years. 

Summary

Amazon is reportedly considering buying a 5% to 10% stake in Bharti Airtel, the third-largest telecom operator in India. In the meantime, shares are testing key resistance around the $2,500 handle. 

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