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By Ben Otto and Eric Bellman 

Alphabet Inc.'s Google will invest about $4.5 billion in Jio Platforms Ltd, the company behind India's largest telecom provider by subscribers, giving the American tech giant a powerful partner for its plans to get hundreds of millions more people online.

Google will take a 7.7% stake in Jio, which brought the internet to millions of people who previously couldn't afford it by offering inexpensive handsets and data plans. It now has more than 388 million subscribers.

Mukesh Ambani, chairman of Jio's parent company, Reliance Industries Ltd., and India's richest man, announced the deal at a Reliance shareholder meeting Wednesday.

"Google has empowered millions of Indians to access helpful information and, like Jio, is a force for change and innovation," Mr. Ambani said. "We welcome Google onboard and are excited about our partnership for what it can deliver to Indians."

Jio and Google also announced that they will work together to develop affordable smartphones.

The tie-up provides Jio with cash and another sophisticated international partner. In return, Google will get a powerful local ally. Reliance Industries has interests ranging from retail to refining and is known for its understanding of regulators and regulations.

Jio has raised billions of dollars from leading technology and private-equity firms around the world this year. The investment by Google follows others by companies including Facebook Inc., Silver Lake, Vista Equity Partners, KKR & Co., General Atlantic LLC, the Abu Dhabi Investment Authority, sovereign investor Mubadala Investment Co. and Qualcomm Ventures.

Reliance has spent more than $30 billion building upstart mobile operator Reliance Jio Infocomm Ltd., which is part of Jio Platforms. Jio is now moving into e-commerce, as legions of people in the country of 1.3 billion begin transacting online for the first time.

Just this week Google announced it was creating a $10 billion fund to invest in Indian tech companies, partnerships and infrastructure. The Jio deal will be the first investment from that fund.

Many analysts and executives consider India one of the last great untapped digital markets. While expansion in most big markets has slowed, India will be adding around 171 million new wireless internet subscribers in the next five years, according to estimates from GSMA Intelligence. That is twice the number expected to be added in China and the U.S. combined.

Mr. Ambani's Jio has led growth in India since it launched in 2016. It built a nationwide 4G network and attracted customers by basically giving subscriptions away for months to promote its service.

When it did start charging it set some of the lowest rates in the world, which have stayed low -- less than $3.50 a month for 1 GB of data a day at 4G speeds.

Its great gamble was that if more Indians were given a taste of what they could do on the internet then subscriptions and usage would take off. His affordable data plans and phone have now given Jio one of the world's fastest-growing captive audiences, which it is trying to leverage to turn itself into a one-stop shop for those coming online for the first time.

Despite the surge in subscriptions, there is still close to half a billion Indians who have yet to get online.

Alphabet has been one of the first global tech companies to see the opportunity for growth from the less-affluent consumers in India and other developing markets. Its "Next Billion User" initiative has tried to make the internet more accessible through mobile phones using its Android operating system.

It has tried to tweak its sites, apps and services to be easier to use by people who have less-expensive phones, for example, or aren't used to using keyboards or English.

It has been so successful in serving those new to the internet in India that many now use voice search in local language on YouTube as their main way to explore the online universe.

"Our joint collaboration will focus on increasing access for hundreds of millions of Indians who don't currently own a smartphone while improving the mobile experience for all," Sundar Pichai, CEO of Google and Alphabet, said in a news release Wednesday.

Write to Ben Otto at ben.otto@wsj.com and Eric Bellman at eric.bellman@wsj.com

(END) Dow Jones Newswires

July 15, 2020 09:26 ET (13:26 GMT)

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