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Alphabet-Vodacom Tie-Up to Provide Internet in Mozambique

Alphabet GOOGL is making every effort to strengthen its global Internet presence on the back of its subsidiary, Loon. This is evident from its latest deal with Vodacom, an Africa-based mobile network operator.

Per the partnership, Loon’s Internet beaming balloons will be leveraged by Vodacom to offer mobile network access to un-served and under-served parts of Mozambique — Cabo Delgado and Niassa provinces.

Notably, both the companies are working with Autoridade Reguladora das Comunicações de Moçambique (ARECOM) and the Institute for Civil Aviation of Mozambique (IACM) for the approval of the same.

Loon balloons will be floating in the stratosphere above Mozambique in the coming months. Further, both the companies are installing terrestrial infrastructure, which will serve as the physical connection point.

The mobile Internet service in these provinces is expected to commence operations in the coming months.

Deal Rationale

The latest deal seems to be a win-win situation for both the companies.

On one hand, it will aid Vodacom’s plans to expand mobile network coverage in Mozambique. On the back of Loon’s Internet solutions, the company’s 4G coverage will reach the remotest parts of the country.

On the other hand, the move will help Google in strengthening presence in Mozambique, which bodes well for its global expansion. The Loon Internet solution will provide 4G service to the above mentioned areas of the country via Vodacom’s mobile network.

Further, the deal highlights the reliability of Loon balloons and its underlined technology. Moreover, the deal bodes well for the Alphabet’s strategy to expand presence in the Internet services market.

Further, Internet services are in high demand globally and its user penetration rate is constantly increasing worldwide. Given this upbeat scenario, the latest deal that focuses on connecting the logistically challenging geographical areas with Internet, is likely to instill investor optimism in the Alphabet’s stock.


Connectivity Mission Gaining Traction

Google remains focused on providing high-speed Internet services globally.

 

Moreover, Google’s growing presence in the emerging markets strives to address the challenges of poor connectivity prevailing in these countries. The Loon-Vodacom partnership remains positive in this regard and augurs well for the expansion of connectivity business.

Notably, Loon aims to connect the world via Internet by providing high speed Wi-Fi access to remote areas of the planet. Apart from Mozambique, Alphabet has recently signed a deal to use its high-altitude Loons balloons to connect rural communities in Peru to the Internet.

Further, Alphabet’s contract win related to connecting rural areas of Kenya through Internet with the aid of its Project Loon remains noteworthy.

All these endeavors will continue to aid the company in increasing its penetration in these developing countries.

Zacks Rank & Stocks to Consider

Currently, Alphabet carries a Zacks Ran #3 (Hold).

Some better-ranked stocks that can be considered in the broader technology sector are BWX Technologies, Inc. BWXT, Benefitfocus, Inc. BNFT and Cadence Design Systems, Inc. CDNS. While BWX Technologies sports a Zacks Rank #1 (Strong Buy), Benefitfocus and Cadence carry a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for BWX Technologies, Benefitfocus and Cadence is pegged at 6.86%, 30% and 11.23%, respectively.

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