Bharti AirtelNSE 1.49 % is in talks with Vodafone Idea to create a fibre joint venture similar to their co-owned tower company, Indus Towers. Vodafone Idea has given the proposal a “warm” response, Bharti Airtel chairman Sunil Mittal said.
“We have made an invitation. We did that in towers — if you remember, Indus Towers was created. And on the same lines, we have asked Vodafone Idea to come and join the fibre company,” Mittal told reporters on the sidelines of the Mobile World Congress. “It will be a two-party JV. We are starting with our own fibre company and if Vodafone Idea brings its fibre assets, then they will get appropriate shares.”
Bharti Airtel is setting up Telesonic Networks Ltd to house all of its 246,000 kilometres of fibre assets. New telecom market leader Vodafone Idea, stung by revenue pressure and losses, recently spun off its fibre assets into a wholly owned unit with an intent to monetise it to raise cash.
“They have a lot of fibre, we have a lot of fibre. But when you combine fibre, it does two things — you get a lot, though we have a lot of overlaps. But both will gain about 25% capacity, and new routes, which we don’t have,” Mittal said. “But importantly, the future build of all fibre starts getting common, so you stop wasting money.”
Experts said both sides could then have the option of monetising their stakes in the fibre joint venture in the same way they are doing in their respective tower companies, besides paring stakes in Indus as well. Rival Reliance Jio Infocomm is also hiving off its tower and fibre businesses into separate units to monetise these assets in a bid to pare debt.
Bharti Airtel and Vodafone Idea are raising cash to invest in networks at a time when revenue and profitability have been hit by the ongoing price wars sparked by the entry of Jio over two years back.
Top Vodafone Idea executives have met senior government officials and ministers, seeking relief from spectrum payments worth about Rs 9,500 crore this year, and have also threatened to default.
Bharti Airtel, however, will meet its commitments.
He again called on the government to reduce levies on the industry and make more spectrum available at reasonable prices. “The government needs to walk the talk. The new policy clearly says revenue maximisation is not the motive,” Mittal said.
Bharti Airtel currently needs only top-up airwaves in some circles, but won’t buy 5G bandwidth at the prices suggested by the telecom regulator, he said. The Department of Telecommunications (DoT) is yet to accept the pricing recommendations but the Telecom Regulatory Authority of India (Trai) has said the rates are “fine.”
“Fine from what point of view? The fact is, renewal spectrum was a gun to the head and operators did not have a choice and those prices are taken as base for future auctions and what logic does that make?” said Mittal.
RCOM, AIRCEL SPECTRUM
Besides auctions, the spectrum of Aircel and RCom could also be put on the block under the insolvency process by their respective resolution professionals. While Aircel is already in the midst of insolvency proceedings, RCom has said it plans to file for bankruptcy.
“We will bid for any spectrum that comes up. But my fundamental thing is that the spectrum belongs to DoT, so how will it be sold by anybody else? The licences are gone. When the licence finishes and no payments made to DoT, the licence is over,” he said.
“Last four quarters were absolutely stable. It’s not profitable and it’s not sustainable but the fact is, future looks very promising. We just have to hang in there, hold on to our market share, ensure that our customers are happy and things will turn around,” Mittal said.
