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Airtel ecstatic about home broadband opportunity; collab with local cable operators paying well

The telco operator added almost 60,000-65,000 net additions in last quarter

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MUMBAI: A recent report by Fitch which indicates a slow revenue growth in FY21 for telecom players might be bad news for Airtel, which is already losing market shares to Jio. But its home broadband business is gradually taking off. In the last quarter of FY 20, the telco operator added almost 60,000-65,000 net additions, one of the highest numbers it has seen in many quarters. Moreover, the lockdown has boosted the demand for home broadband.

“We are excited about the home broadband opportunity. I think India is an underserved market and there is a very big opportunity to expand broadband on a structural basis. Having said that, I think what we have seen in the recent few weeks is a massive surge in latent demand and home broadband,” Bharti Airtel India and South Asia managing director and chief executive officer Gopal Vittal said in an earnings call.

Vittal also spoke about an innovative model that it is experimenting with: collaborating with local cable operators to provide the last mile and using a digital model to access more cities and expand the scale of its broadband business. While the model has already been rolled out in 13 cities, he claims it has seen good traction reinforcing its trust on opportunities for broadband internal expansion.

Talking about the strategy, Vittal added that they need to expand a lot more in top ten cities at first. Hence, there will be some step-up in capex directed to expanding Airtel’s broadband in these large cities. Airtel rolled out over 250,000 home parcels in the last quarter while total capex for the quarter stood at Rs 97 crore.

“The second part is going beyond 10 cities or 50 cities. We got into smaller cities. For example, we have gone into Jammu, Dehradun, Bareilly, and Nasik. These are cities where we hadn't gone before and now have partnered with local cable operators and created an Uber-like model, which is entirely digital and gives them a share of revenue and this is actually working quite well,” Vittal said.

“We are unleashing entrepreneurial energy of these cable operators, in managing the last mile for us, and at the same time, we have the Airtel brand, customer support, billing systems, technology and of course the purchase of routers and all of the other backend equipment coupled with the fact that we have fibre availability at the towers for which the backhaul is available. So I think we are using the best of both worlds to actually partner and expand,” he added further.

According to TRAI data, the top five wired broadband service providers were BSNL (8.23 million), Bharti Airtel (2.43 million), Atria Convergence Technologies (1.54 million), Hathway Cable & Datacom (0.92 million) and Reliance Jio Infocomm Ltd (0.84 million) as on 31 January, 2020.

Bharti Airtel India and South Asia chief financial officer Badal Bagri said that affordability has been one of the key drivers which he terms war on waste. This ‘war on waste’ is not just about operating expenses but also about efficiency and capital expenditure. He also mentioned that Airtel’s cost of the rollout of home passes has substantially reduced over the last two-three years. Hence, he is of the view that the cost structures which it operates in are fairly affordable, enabling them for an aggressive bid in the sector.

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