Airtel is looking to usher in a new era of core network infrastructure sharing by competing telcos. The company on Tuesday acquired telecom equipment maker Alcatel-Lucent’s 74 per cent equity share in Alcatel Lucent Managed Network Service India, the joint venture that currently manages its pan-Indian DSL broadband and fixed-line network. The entity would now operate independent of Bharti and other competing operators would be invited to join with equity participation — a replication of the infra-share model tried in tower business.
Bharti said the operators could also bring in the management of their broadband and fixed-line businesses under this company’s fold.
Bharti Airtel, the country’s largest telecom service provider, earlier held 26 per cent stake in the joint venture, set up in 2009. While no financial details were available, the five-year deal that formed the JV to manage networks was worth $500 million and was to end in 2014.
Sanjay Kapoor, CEO (India & South Asia), Bharti Airtel, said: “Bharti pioneered the outsourcing model that helped revolutionise the telecom industry. With our new innovative model, we are breaking ground in an industry that is on the cusp of massive data growth. This model, along with our recently launched Network Experience Centre, will provide us greater control over the delivery of a world-class data experience to customers across our portfolio of networks.”
Bharti offers broadband, data and telephone services (fixed lines) across 87 cities and has a customer base of 3.3 million. Of this, 1.4 million users subscribe to broadband and internet services. It also has outsourcing deals for mobile networks with Ericsson, Nokia Siemens, and Huawei Technologies. Currently, Tata Tele, RCom and state-owned BSNL and MTNL are key players offering fixed lines and DSL broadband. Analysts say, given that RCom has signed a mega deal with Alcatel just a few weeks ago for outsourcing, and with state-owned firms shying away from equity participation, finding partners might not be easy. Also, Vodafone has little presence in fixed lines and broadband, limited to its enterprise business.
say the model makes sense because in a plain outsourcing deal with equipment makers, pioneered by Bharti to cut cost, the focus on customers’ need was taking back seat.
However, with pressure to increase average revenue per user (Arpu) and average revenue realisation, the focus is no longer on adding subscribers. It is now on retaining the existing ones and making them increase their usage or avail of value-added services.
Also, under the new model, by bringing their core network (switching, fibre backbone, etc, but not spectrum), operators would save costs and use networks efficiently. COAI Director-General Rajan Mathews says: “Sharing of core network infra, like in towers, will cut costs, help reduce operators’ investments and unlock value that telcos could spin in independent entities.” He says the process will be aided by the fact that the government is planning separate network and access licences.
Telcos have already tried the sharing model with success in the tower business. Three operators — Bharti (42 per cent stake via Bharti Infratel), Vodafone (42 per cent) and Idea Cellular (16 per cent) had come together to merge their tower assets in Indus Towers, which now has a valuation of Rs 8,500-10,000 crore and is looking at a public listing.