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Bharti Airtel - Set to replicate its wireless success in broadband

June 15, 2007
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The telecom revolution in India has recently started displaying another dimension. After registering exponential wireless growth, the country is experiencing increasing interest in broadband.Consequently, Bharti Airtel, having firmly established its dominance in the wireless segment, is gearing up to replicate this success in the broadband and fixed line business.

However, this is no small task. The segment has long been the turf of PSUs like Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). But with the dynamic Atul Bindal taking over as joint president of Bharti's broadband and telephone services segment, the company is set to launch a slew of initiatives to take on the competition, and notch up subscriber numbers.

For starters, the company is planning to introduce internet protocol television (IP-TV) services in Delhi and the National Capital Region by the end of 2007. Trial runs are already under way in 100 households in Gurgaon. The service is slated to benefit Bharti immensely. Triple play will not only increase the company's average revenue per user (ARPU), but is also expected to stem the attrition in the company's fixed line subscriber base.

Despite failing to gain the first-mover advantage in this endeavour (MTNL already having initiated IP-TV services in November 2006), Bharti will offer its customers some additional benefits. While MTNL has launched just 20 channels, Bharti subscribers can expect 150 channels as early as December 2007.

Background

Set up in 1995, Bharti functions via three sub-units: mobile services, broadband and telephone (B&T) services, and enterprise services. The broadband and telephone business group provides services in 15 circles. It currently has 1.8 million subscribers in 94 cities, of which approximately 600,000 are digital subscriber line (DSL) users as of March 31, 2007. The service provider offers supply and installation of fixed line telephones; local, national and international long distance voice connectivity; and broadband internet access via DSL technology.

Bindal took charge of the broadband and telephone services segment in September 2006. Since then, Bharti has raced ahead to wire up homes. It has invested Rs 44,987 million in its broadband and telephone segments, which amounts to 14 per cent of its total investment for financial year 2006-07.

In Jaipur, the first phase of the company's network rollout is already complete. In a bid to increase penetration in the city, Bharti has also announced a strategic alliance with HCL Technologies, according to which an Airtel broadband connection will be offered with every HCL PC sold.

Bharti has also tied up with Hong Kong-based PCCW Global. It will connect its IP infrastructure network (based on multi protocol label switching-internet protocol virtual private network) to PCCW Global's network. With the extended international connectivity, Bharti will offer enhanced end-to-end global solutions and seamless connectivity to enterprise customers in India and abroad.

Financial results

Such initiatives have reflected on the company's finances as well. Financial year 2006-07 saw the segment's subscriber base rise by 39 per cent from 1,346,740 users on March 31, 2006 to 1,871,387 as on March 31, 2007. During the same period, its revenues also increased by 47 per cent to Rs 6,044 million. This comprised 12 per cent of the company's total revenues.

The segment has the potential to bring in substantial revenues in the future.While wireless ARPUs are low and diminishing, broadband and telephone service ARPUs are approximately three times larger at Rs 1,112, and growing. Further, according to the Telecom Regulatory Authority of India (TRAI)'s performance indicator reports, the company's market share has been climbing steadily upwards.

In 2006, Bharti knocked out Videsh Sanchar Nigam Limited (VSNL) to become the country's fourth largest internet service provider, after BSNL, MTNL and Sify. As of December 2006, the company's market share stood at 6.96 per cent.

The road ahead

Srinivas Rao, chief marketing officer of Airtel Broadband and Telephone Services, outlines the company's strategy to achieve leadership in broadband services. The company plans to introduce these services in new cities, increase network penetration in cities where it is currently present, introduce new technologies and triple play, and offer wireless broadband access through Wi-Fi and Wi-Max.

Bharti has already been successful in bundling telephone and broadband services. In the future, the company will focus on more economical means of deploying broadband, as well as new value-added services. According to Akhil Gupta, managing director, Bharti Enterprises, "We are actively working on developing value-added services for broadband users. The critical issue in tapping the broadband market is to use cost-effective solutions for rollout."

With its focused outlook and multi-pronged strategy, the company is ready to replicate its wireless success in broadband.

 
 
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