Airtel is replicating its strategy for tower infrastructure with fibre by creating a separate B2B company to develop optical fibre cable infrastructure and lease it out to other telcos, the Economic Times reports. The new entity will fill Telesonic Networks Ltd, an Airtel subsidiary formed in 2009. The move was first disclosed to regulators in November 2017, with Airtel approaching the National Company Law Tribunal in March this year for permission to de-merge.
As the Airtel owned subsidiary, Telesonic provided “end to end wire line network management” solutions. It was previously known as (pdf) Alcatel Lucent Network Management Services India Ltd. In May 2012, Airtel selected Alcatel Lucent to create an IP based network to expand its high speed broadband connectivity. In less than a year, Airtel had bought out Alcatel Lucent’s shareholding, to create a new business for fixed line and broadband networks.
As of now, Airtel’s strategy of leasing to competing telcos will be cemented by diluted ownership. Like its Indus Towers entity, other telcos are likely to pick up major shareholding, giving no single telco full control over it. In a single sale, Airtel will sell off a major portion of its quarter-million kilometres of fibre to Telesonic. Airtel told regulators in November last year that the value of the sale may be up to Rs 5,650 crore.
What Airtel gives up in control it regains in lower costs, as all shareholders will have to pitch in for capital expenditure. Such a structure is also likely to have less trouble with anti-monopoly authorities like the CCI. “Given the significant growth in data consumption in recent years, we believe a robust and independent infrastructure company that serves the growing need of fibre in the telecom industry is critical,” Gopal Vittal, Airtel’s India CEO, was quoted as saying in an internal memo by ET.
Abhay Savargaonkar appointed Telesonic CTO
The company’s India CTO Abhay Savargaonkar has been appointed as the CTO of Telesonic. Randeep Singh Sekon, CEO at Hutchison Tri in Indonesia, will be stepping into Savargaonkar’s prior role as Airtel CTO. Sekon last worked for Airtel in 2006–09 as Senior Vice President for Network Planning before moving to Axiata in Malaysia. Both Savargaonkar and Sekon will be reporting directly to Airtel CEO Gopal Vittal, per ET’s report.
Airtel’s tower infrastructure
In July, Bharti Infratel and Indus Towers, both of which are in part or full owned by Airtel, got CCI’s approval to merge. After combing, the resultant entity will be one of the largest owners of telecom towers in the world, with around 1.63 lakh towers. Both the companies together may be valued at $14.6 billion, ET reported at the time. In the same month, Airtel got approval from the Securities and Exchange Board of India too. Approvals from the NCLT and the telecom department are pending, as Airtel ponders a strategic sale of some shares in the combined entity to save cash. Credit Suisse said in a note that other telcos may do the same as diminishing liquidity puts pressure on telcos.
Gulf Bridge acquisition
In March, Airtel announced its acquisition of the India leg of a submarine cable system by Gulf Bridge International. It can now use a “significant capacity” on the Middle East-Europe leg of the cable system. These cables are used to carry telecommunication signals to landing stations across the world and act as the backbone of the internet, connecting one region to another. After the latest deal, Airtel claims to have large capacities — owned and leased — on multiple international submarine cable systems and offers the maximum number of routes between India and Europe. Earlier this month, Airtel partnered with Telecom Egypt to use undersea cable infrastructure that the latter owns between the Middle East, Europe, and Asia.