ET BureauNEW DELHI: India’s top telecom company Bharti Airtel is forming a new independent fiber company and has appointed Abhay Savargaonkar as the new unit’s chief executive officer.
Airtel could replicate its approach to Indian tower operations and dilute stakes to create an independent fiber company that leases out key infrastructure to potential mobile phone operator clients, analysts said.
The Sunil Mittal-owned telco, which confirmed Savargaonkar’s new role in an emailed response to ET’s queries, made an internal announcement to this effect last week.
Savargaonkar, who will continue to report to Gopal Vittal, Bharti Airtel’s CEO (India, South Asia), was the company’s director of networks, equivalent to chief technology officer, previously.
“Given the significant growth in data consumption in recent years, we believe a robust and independent infrastructure company that serves the growing need of fiber in the telecom industry is critical,” Vittal said in the internal communication, a copy of which was reviewed by ET.
Bharti Airtel is in the last stages of transferring its optical fiber cable network to a wholly-owned subsidiary, Telesonic Networks Ltd, by way of a slump sale. The company runs 246,000 route kilometres of optic fiber, which it is expanding aggressively to cater to surging data growth. “Fiber assets from Telesonic may eventually be transferred to this new subsidiary,” one of the sources said.
Nitin Soni, director, Asian corporates, at Fitch Ratings, said that it made sense to have a separate company that owns fiber. Airtel had previously formed a telecom tower joint venture — Indus Towers — with Vodafone India and Idea Cellular.
“There is no point of duplication on capex spending like tower infrastructure. India is one of those countries where price competitiveness is so high that most telcos are taking the rational decision to make independent companies,” he said.
But to make it a truly independent company, Airtel would need to sell a majority stake to attract other players to use the assets, similar to what it is doing with its tower business, Soni said.
“If you keep having stake, it won’t be regarded as truly independent by competitors like Reliance Jio, and would continue to build its own fiber. Unless assets are leased by Jio, these independent companies can’t grow,” he added.
Airtel is also bringing in Randeep Singh Sekhon to head the networks department as the new chief of technology for its India and South Asia operations, replacing Savargaonkar.
Sekhon, who will also report to Vittal, earlier worked in various senior leadership roles with telcos in Malaysia and Indonesia with his previous role being CEO of Hutchison 3 Indonesia.
Airtel could replicate its approach to Indian tower operations and dilute stakes to create an independent fiber company that leases out key infrastructure to potential mobile phone operator clients, analysts said.
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Savargaonkar, who will continue to report to Gopal Vittal, Bharti Airtel’s CEO (India, South Asia), was the company’s director of networks, equivalent to chief technology officer, previously.
“Given the significant growth in data consumption in recent years, we believe a robust and independent infrastructure company that serves the growing need of fiber in the telecom industry is critical,” Vittal said in the internal communication, a copy of which was reviewed by ET.
Bharti Airtel is in the last stages of transferring its optical fiber cable network to a wholly-owned subsidiary, Telesonic Networks Ltd, by way of a slump sale. The company runs 246,000 route kilometres of optic fiber, which it is expanding aggressively to cater to surging data growth. “Fiber assets from Telesonic may eventually be transferred to this new subsidiary,” one of the sources said.
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Nitin Soni, director, Asian corporates, at Fitch Ratings, said that it made sense to have a separate company that owns fiber. Airtel had previously formed a telecom tower joint venture — Indus Towers — with Vodafone India and Idea Cellular.
“There is no point of duplication on capex spending like tower infrastructure. India is one of those countries where price competitiveness is so high that most telcos are taking the rational decision to make independent companies,” he said.
But to make it a truly independent company, Airtel would need to sell a majority stake to attract other players to use the assets, similar to what it is doing with its tower business, Soni said.
“If you keep having stake, it won’t be regarded as truly independent by competitors like Reliance Jio, and would continue to build its own fiber. Unless assets are leased by Jio, these independent companies can’t grow,” he added.
Airtel is also bringing in Randeep Singh Sekhon to head the networks department as the new chief of technology for its India and South Asia operations, replacing Savargaonkar.
Sekhon, who will also report to Vittal, earlier worked in various senior leadership roles with telcos in Malaysia and Indonesia with his previous role being CEO of Hutchison 3 Indonesia.
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