By: Pankaj Doval
Source: Times of India
BARCELONA: Hit by steep competition unleashed by Reliance Jio, Airtel and Vodafone-Idea are likely to team up in the optical fibre space, which will increasingly become the backbone of future network expansion. Airtel chairman Sunil Mittal said on Tuesday that he has “invited” Vodafone-Idea to be a partner in his fibre company Telesonic, and the two can pool together assets.
“We have given an invitation. We did that in towers, and if you remember, Indus Towers was created. On the same lines, we have asked Vodafone-Idea to come and join the fibre company.” Asked about the reaction from Vodafone-Idea, he said, “Warm response.” The partnership with Vodafone-Idea will help Airtel save costs by cutting down on duplication in expansion of the fibre network.
The Airtel chairman said there will be synergies through the joint venture if the two companies decide to come together. “They have a lot of fibre, we have a lot of fibre. Though we have lot of overlaps, both of us will gain about 25% capacity and new routes which we don’t have… So, you stop wasting money.”
The statement by Mittal comes a day after Vodafone group CEO Nick Reads said that telecom companies “need to collaborate and share network” the worldover to offer better coverage and manage costs efficiently. Asked whether he would also invite Jio to the proposed mega fibre formation, Mittal said, “From my point of view, more the merrier.”
However, he added, “First let’s get the Vodafone-Idea thing going, then we will see after that.” An Airtel-Vodafone-Idea combine will be the first major rival block to Jio’s high-pitched challenge in the telecom space. It will come months after completion of the merger between Vodafone India’s business and Idea Cellular. Mittal also said that to broadbase offerings to customers, Airtel is open to partnerships with players such as Flipkart and Amazon. However, he has ruled out participation in 5G auctions, saying reserve prices are too high and it “makes no sense” to buy now.
The Airtel chairman is against the general view in the market that older telecom operators are going down due to Jio’s onslaught or may default on statutory and bank payments. Mittal said he will not only survive, but thrive. On troubles in the telecom sector where companies are reeling under heavy losses and large debt piles, Mittal said the government needs to support the industry or else the companies may go down the way the aviation sector collapsed. However, he added that companies that can sail through the current tough times, may get to reap the benefits of a large consuming market in the long run.