The ailing Indian operator hopes a deal with IBM and its Red Hat subsidiary will reduce costs and boost competitiveness.
Bharti Airtel, India's third-biggest operator by customer numbers, has picked IBM and its Red Hat subsidiary to build a telco cloud network that will support its core operations and help it to better monetize its 4G services. This deal came shortly after Airtel awarded a $1 billion radio contract to Nokia. (See India's Airtel awards massive network deal to Nokia.)
As part of the deal, IBM and Red Hat will help Airtel to build its next-generation core network, allowing the operator to reduce latency – a signaling delay – and improve customer service. Airtel also hopes to be able to speed up the launch of new products.
India has witnessed a surge in data consumption in recent years. The recent COVID-19 pandemic could lead to a further increase as working from home and e-learning become routine activities.
"Our goal with this powerful, seamless horizontal approach is to make our network future-ready and enable Airtel to efficiently serve the massive surge in data consumption," said Randeep Sekhon, Airtel's chief technology officer, in a statement. The company did not disclose the financial details of the contract.
Nevertheless, one goal for Airtel is to reduce operational and capital expenditure as data traffic grows. If that works out, Airtel will be in a better position to fight Reliance Jio, its main rival in the Indian market. Airtel's legacy network is possibly the main challenge it faces in trying to modernize operations. It is under pressure from a tie-up between Facebook and Jio that could generate a raft of new digital products and services. All that makes the cloud deal with IBM and Red Hat absolutely critical. (See Facebook places huge bet on India with $5.7B Jio stake and Jio-Facebook deal bodes ill for Airtel and Vodafone Idea.)
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In the meantime, the pandemic is forcing Indian businesses to speed up their own digital transformation. Airtel will be desperate to figure in those plans. Fail to gain "mindshare" with business customers and it could further lose out to Jio.
The deal between Airtel and IBM builds on a relationship that dates back to 2004, when they signed a landmark agreement for the outsourcing of managed services.
For IBM and Red Hat, the deal with Airtel follows the signing of a similar contract with Vodafone Idea, India's other big service provider, in October last year. That agreement is also designed to simplify network operations, cut expenses and speed up service launch.
Both Airtel and Vodafone Idea will have to move fast to consolidate their position. Moving more of their operations into the cloud seems to be a step in that direction, and one that could relieve financial pressure on the struggling firms.
— Gagandeep Kaur, contributing editor, special to Light Reading
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