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Airtel Plans Cross-Operator Broadband & Fixed Line Network Entity

This is really interesting and, frankly, pioneering: Bharti Airtel has mooted a cross-operator broadband network entity, which will manage broadband and fixed line networks in a manner, it says, similar to the Indus tower, a joint venture it created along with Idea Cellular parent Aditya Birla Group and Vodafone India (which typically operate as a cartel consortium).

To begin this process, Airtel has announced that it will acquire the entire equity stake of Alcatel Lucent India in Alcatel Lucent Managed Network Service India – a joint venture between Bharti and Alcatel Lucent India Ltd. The financial details of the deal were not disclosed yet. Shishir Kumar, CEO – Upper North, Bharti Airtel has been appointed as the CEO of the entity.

Following the buy out, the company says the entity will operate independent of Bharti and it will invite other operators to join in with equity participation, and integrate the management of their broadband and fixed line networks.

In 2009, Bharti and Alcatel Lucent India had formed a 26:74 JV and the five-year network contract for the joint venture, which was worth about $500 million, ends in April 2014, according to a Deal Journal, WSJ. The JV manages and deploys Airtel’s fixed line and broadband network in India. 

Why This Is Interesting

If you think about it, this is similar to the unbundling of the last mile: the rationale behind that is that the network going to the home is independent of the service provider using it, and the  service provider who acquires the customer uses it, and pays a fee. This should have ideally been done with government owned telecom networks being run by BSNL and MTNL, but since it doesn’t look like that will ever (ever, ever) happen, it’s a very good move from Airtel.

Broadband penetration in India is abysmal, and while BSNL is the largest service provider, that is only because of its legacy infrastructure. Airtel hasn’t really done its bit either – with a really small broadband base of only around 3.3 million fixed line customers, and less than 1.4 million connections, choosing to milk its existing base with anti-customer “Fair Usage” policies, instead of trying to grow its user base. There are even parts of metro cities like Delhi, which Airtel doesn’t service.

With this move, the network expansion responsibility will be with an independent entity, irrespective of the telecom operator requirements, and it might be that the combined entity will be funded with the plan to raise money and list it.

From an operations standpoint, the cost of network expansion will be shared by telecom operators, and the incentive will be the possibility of offloading data usage on network to WiFi.

There’s a long way to go, though.

With inputs from Apurva Chaudhary

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