Airtel to Form New Fiber Firm in India

Bharti Airtel, one of India's biggest telcos, is planning to form a new independent fiber company, according to media reports.

The move could hold merit in a price-sensitive market like India, where fiber owners have leased network capacity to other service providers. It would also seem to replicate its efforts to manage tower infrastructure through the formation with rivals Vodafone India and Idea Cellular Ltd. of Indus Towers Ltd. a few years ago.

Indeed, other telcos might be interested in taking a stake in Airtel's new fiberco, and Airtel may be keen to find partners. After all, potential clients seem likelier to lease fiber from the company if it is not under the exclusive control of one player. Joint ownership could also help to reduce expansion costs, with all stakeholders required to contribute funds toward network rollout.

Currently, Bharti Airtel Ltd. (Mumbai: BHARTIARTL) is in the process of transferring nearly 250,000 kilometers of optical fiber to a fully owned subsidiary called Telesonic Networks in a deal worth 56.5 billion Indian rupees ($809.4 million). Assets owned by Telesonic -- a provider of network management services that Airtel acquired in 2012 from an Indian division of Alcatel-Lucent (now subsumed into Nokia) -- could then be moved to the new fiber company.

Fiber is becoming increasingly important in India with rising volumes of data traffic on mobile networks. Service providers are realizing they will not be able to provide high-quality services without the use of fiber.

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In the fixed broadband space, Airtel is also gearing up for competition from archrival Reliance Jio, which recently announced the launch of its Jio Gigafiber service. Rivalry will also come from the merger between Vodafone and Idea. Vodafone's previous takeover of YOU Broadband already gives it fiber infrastructure in the west of the country.

While Airtel offers fixed broadband in 89 cities, and holds a 12% market share, it hopes to increase service availability to 100 cities by the end of the year. A separate fiber company might help it to focus efforts on expanding its presence in this market.

Abhay Savargaonkar, who has worked in various roles for Airtel since 2002 (bar a year-long stint with Alcatel-Lucent in 2005/6), will head up the new entity. Most recently, Savargaonkar was Airtel's chief technology officer for India and South Asia, spearheading the deployment of Airtel’s 3G and 4G network in India. Randeep Singh Sekhon, who has also worked with Airtel in the past, will fill Savargaonkar’s shoes as Airtel's new chief technology officer.

— Gagandeep Kaur, contributing editor, special to Light Reading

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