Bharti Airtel to shell out Rs 60,000 cr for network upgrade

Announcement comes ahead of impending launch of Reliance Jio next year

The country’s largest telecom service provider Bharti Airtel plans to invest Rs 60,000 crore over the next three years to expand its network.

The investment includes Airtel’s capital expenditure guidance of around Rs 16,000 crore in the current financial year. At the end of the September quarter, Airtel’s net debt stood at Rs 70,777 crore.

The development comes ahead of the impending launch of 4G services by Reliance Jio, owned by Mukesh Ambani, in the next year, which is expected to increase competition in the telecom sector.

Investors and analysts have turned cautious about incumbent telecom companies as Reliance Jio is expected to target their existing base. This makes it imperative for Airtel to defend its turf by ensuring that its service is top quality.

Airtel's network transformation programme, titled Project Leap, intends to offer better speeds for data and fewer call drops on the voice side. Airtel plans to deploy about 70,000 base stations in the current financial year and add another 160,000 base stations over the next three years across India. This will enable Airtel’s customers to avail broadband speeds of 50 Mbps up from the current 16 Mbps by March 2016.

Airtel will also offer speeds of up to 100 Mbps through its fibre-to-home network. It will swap out-of-legacy networks and will start with the Punjab, Karnataka, Andhra Pradesh and Assam circles.

Gopal Vittal, managing director and CEO, Bharti Airtel (India and South Asia) said the investment would be funded mainly through cash accruals. "Most of this investment will exclude payment for spectrum.”

“We have secured our spectrum footprint and need to pick up spectrum only in some pockets,” he said when asked if the company was looking to buy more spectrum.

Airtel has invested about Rs 1.6 lakh crore in its active and passive networks, spectrum, fibre, submarine cables and systems till date. Also, it will expand its mobile broadband coverage to all towns and about 250,000 villages by March 2016. In the next three years, it will offer mobile broadband to over 500,000 villages across the country.

For better indoor coverage, Airtel will deploy solutions such as small cells – about 100,000, WiFi hotspots and other indoor solutions – for efficient voice and data services.

Under the 10-point programme, the major developments include modernisation of networks, upgradation of copper lines, swapping out legacy networks and reduction in the carbon footprint.

Telecom operators have come in the line of fire of late due to a sharp rise in call drops. The Telecom Regulatory Authority of India (TRAI) has directed operators to pay Re 1 as compensation for every call drop (maximum three a day) to mobile users starting January 2016.

“There still are problems with the network. We are still not where we need to be. There are misplaced notions on emissions and lack of space for sites. The primary purpose is a commitment to building a world-class network in India," Vittal said.

In October this year, Airtel completed the sale of 8,300 mobile towers in seven African countries for $1.7 billion (about Rs 11,000 crore), which will mainly be used to reduce debt. Airtel is divesting 15,000 towers in 13 countries in Africa to different companies.