Reports have emerged suggesting China Mobile is attempting to create a joint-venture in the Indian market to capitalise on the growing cloud segment.

Although these are nothing more than rumours for the moment, Live Mint has suggested senior officials from China Mobile have been in separate meetings with both Vodafone Idea and Bharti Airtel to set-up a joint-venture to tackle the cloud market.

“The top executives of China Mobile met senior managements of Bharti Airtel and Vodafone Idea separately in December,” stated an anonymous source. “China Mobile is interested in the Indian market and wants to come as a holding company with either of these two companies or even both.”

China Mobile has been aggressively growing its presence in the Chinese cloud market, though now it appears to be looking overseas for increased opportunities. India will of course look like an interesting opportunity, not only because of the size but the current market dynamics.

It is not overly complicated to understand the potential of India cloud market. As the second-most populous country on the planet, there are plenty of customers, though the drive towards digital has been very aggressive in recent years thanks to the disruption of Reliance Jio, effectively democratising digital. Attention has largely been paid towards the fight for consumer subscriptions, though the cloud market has also been growing.

As it stands, Bharti Airtel has a cloud services unit in ‘Airtel Business’, while it is also expanding its data centre footprint through ‘Nxtra Data’. Vodafone and Idea brought together their business units following the overarching merger between the telco parent companies and have also been working closely with Microsoft in recent months. Finally, Reliance Jio has a cloud business which was launched in August.

But it is the untapped potential which is getting foreign corporations excited. The digital economy is in its embryonic growth stages today, and the right investments could lead to significant gains in the future. Unfortunately for the Indian telcos, the current financial climate is not particularly helpful to speculative investment or aggressive expansion.

The Indian telcos are almost broke. A three-year long pricing war has crippled the spreadsheets, while the spectrum licence fee bill from the Government is eye-wateringly large. The Indian telcos are not in an attractive financial position, but this presents bargain opportunities for foreign investors who have deeper pockets.

China Mobile certainly fits into that category, and this could be a very co-beneficial relationship. China Mobile want to spread its cloud wings abroad through its investment arm, China Mobile Investment Holdings. India has an opportunity and the Indian telcos do not have the cash to capitalise on the potential today. Chinese money would certainly be welcomed to fuel the initial venture into the Indian cloud.

Interestingly enough, this could also have an impact on the geo-political tensions which have dominated the news for months.

The US does not like China, this is somewhat of an understatement, and it has been pressurising the Indian Government to break ties with Chinese infrastructure vendors. The emergence of a joint-venture, partly funded by a state-owned Chinese telco is not likely to have a positive effect on the already strained relationship between the US and India.