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Alphabet’s Loon Enters Commercialization Year

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Telkom Kenya is using Loon’s technology

As Alphabet (GOOGL) gears up to release its results for the fourth quarter of 2018, the company is about to start booking revenue from its brand new business of providing high-speed Internet connectivity using specialized balloons. Alphabet’s Loon subsidiary partnered with Kenyan telecom operator Telkom Kenya to deploy its Internet balloons to provide Internet connectivity in pockets of the country on a commercial scale, Bloomberg reported.

The partnership with Telkom Kenya is expected to start generating revenue for Loon this year. Loon is a member of Alphabet’s experimental businesses known collectively as Other Bets.

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Strong interest in Loon’s technology

Besides Kenya, other countries in Africa, Asia, and Latin America have shown interest in Loon’s technology to help them expand Internet access and bridge the digital divide.

Enlarging Google’s market

In addition to direct revenue from the commercialization of Loon’s technology, bringing Internet access to more people also has the potential to expand the market for Loon’s sister company, Google, which makes money mainly from providing online advertising services. More people online means a larger audience for Google advertisers.

Google’s advertising revenue rose 20.3% YoY to $29 billion in the third quarter of 2018, the most recent reported period. Facebook (FB), Twitter (TWTR), and Baidu (BIDU) grew their advertising revenues by 33%, 29%, and 18% YoY, respectively, in the third quarter. Yelp’s (YELP) advertising revenue jumped 16% YoY in the third quarter.

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