Bharti Airtel plans $9 billion investment to upgrade India phone network

By Tommy Wilkes

NEW DELHI (Reuters) - India's biggest telecommunications carrier, Bharti Airtel Ltd , will invest 600 billion rupees ($8.98 billion) over three years to upgrade its network, as competition heats up in the world's second-biggest mobile phone market.

The investment plan comes as Reliance Industries Ltd , headed by India's richest man Mukesh Ambani, prepares to launch the nation's biggest 4G broadband network and take on Bharti Airtel, which is headed by billionaire Sunil Mittal.

Mobile phone carriers in India have spent billions of dollars on buying telecom airwaves to meet surging demand for quality and fast data connection as more Indians access the Internet through their smartphones.

Airtel said on Monday the bulk of its $9 billion investment would be used on infrastructure to improve voice and data services in a country known for its poor mobile connectivity.

Gopal Vittal, Bharti Airtel's chief executive for India and South Asia, said the planned investment, to be raised largely through cash accruals, includes the capital expenditure target of about $2.2 billion for the current fiscal year to March 2016.

"There still are problems with the network...We are still not where we need to be," Vittal told reporters, referring to India's increasingly congested airwaves that leave calls disconnected in the middle of conversations.

"The primary purpose of this is a commitment to building a world class network in India," he said, adding the company has already bought most of the radio airwaves needed.

There are more than 970 million mobile phone subscriptions in India, government data show. The number of smartphone users topped 140 million last year, and is expected to reach 651 million by 2019, according to a study by Cisco.

Airtel, which also competes with Vodafone Group PLC's India unit and Idea Cellular Ltd , will lay 550,000 kilometres of domestic and international fibre cable and expand mobile broadband coverage to 500,000 Indian villages in three years, from 250,000 today, Vittal said.

The investment plan also comes in amid the government's "digital India" push to connect 250,000 villages by 2019.

($1 = 66.7800 rupees)

(Reporting by Tommy Wilkes, additional reporting by Devidutta Tripathy in MUMBAI; Editing by Sunil Nair and Gopakummar Warrier)