Airtel to Float Independent Fibre Infrastructure Company

Airtel is creating a separate B2B company to develop optical fibre cable infrastructure and lease it out to other telcosBy Aroon Deep, Medianama
August 20, 2018

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.

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