Bharti said to be sniffing around RCom

Bharti Airtel is reportedly eyeing up Reliance Communications spectrum assets, which are currently being sold by lenders who are trying to recover Rs45,000cr in debt.

According to India Infoline, Bharti is making moves towards the assets, though Reliance Jio are also interested in the assets. RCom has been struggling for some time now, and is rumoured to be shutting down its voice services from next month. Perhaps we are about to see the beginning of a bidding war.

It certainly wouldn’t be the first time Jio has turned up and spoilt a Bharti Airtel party. Perhaps we should not be surprised by Bharti Airtel cracking open its wallet and trying to buy its way out of a difficult situation.

To counter the Jio challenge, we have seen a few different tactics. Vodafone and Idea for instance, decided there was logic in making friends. Combine two of the largest players and create a new market share leader. Seems like a good idea. Others, such as Telenor, decided they didn’t want anything to do with scary Jio and ran home to hide in the corner.

Bharti Airtel has taken what some people might describe as the more obnoxious route. Throw the cash around and buy everything in sight. Show everyone that you are likeable because you have a big bank account. Earlier this year it bought the Indian operations from cowering Telenor, and in October it purchased Tata Teleservices.

Who knows what the right response to the Jio challenge is, but at least Bharti is doing better than RCom.

Tata comes from nowhere to top Indian subscriber adds

The Telecom Regulatory Authority of India (TRAI) has released subscriber numbers for August, and somehow Tata Teleservices topped the net add list.

It still doesn’t quite have the numbers to compete at the top of the overall rankings, but if the subscriber numbers from August are anything to go by, Airtel has bagged itself a nice acquisition. In terms of the overall performance of the notable names in the market:

  • Tata Teleservices added 4.89 million subscriptions over the month
  • Reliance Jio has almost 4.1 million net additions
  • Airtel lost 765,000
  • Vodafone was down 2.4 million
  • 6 million subscriptions vanished from Idea’s ranks
  • Reliance Communications managed to misplace 4.6 million customers

Last month, Bharti Airtel agreed to acquire the ‘struggling’ mobile business of Tata Teleservices, in what is looking like some great business now. As part of the deal, all past liabilities and dues are to be settled by Tata, while Airtel would absorb the 40 million customers of Tata. According to TRAI, this number has now swelled by 11% without Airtel having to do a thing, taking market share to 3.96%.

Unsurprisingly, Airtel still stands at the top of the market share rankings with 23.7%, while Vodafone and Idea take two and three with 17.55% and 16.11%. The combination of these two would certainly make a monster business, but dropping a combined 5 million customers is a worry. We’re not too sure how many customers were exchanged between to two, but 5 million is still a very large number. Reliance Jio’s market share now stands at 11.19%.

Elsewhere in the Indian market, American Tower has been named as the acquirer of the standalone tower businesses of Vodafone India and Idea Cellular.

The pair have separately agreed to sell their respective standalone tower businesses in India to ATC Telecom Infrastructure Private Limited for an aggregate enterprise value of $1.2 billion. The combined portfolio has approximately 20,000 towers with a combined tenancy ratio of 1.65x. As part of the agreement, the trio have agreed to treat each other as long-term preferred partners.

Sharks circling Reliance Communications but Jio remains quiet for now

Reliance Communications rumours are continuing to swirl after a weekend of adverts and offers to lure customers away from the troubled telco.

The telco has been in a bit of trouble for a while as debts continued to pile up (supposedly in the region of $6.8 billion), and it would seem the attempted acquisition of Aircel could be the final roll of the Reliance Communications dice. Chairman Anil Ambani had promised cash reserves at Aircel would provide a more stable foundation for Reliance Communications, but both parties seemingly got sick of endless delays, abandoning any deal.

And the smell of blood has made its way to the noses of the cut-throat competitors; apparently the scavengers can’t even wait for the limping giant to die; the steaks are being carved out already. This weekend saw Bharti Airtel launch a number of adverts welcoming any Reliance Communications customers to their ranks, and Vodafone launch a referral scheme, promising a £1.50 kickback to any of its customers who can tempt family and friends into their ranks.

While Airtel and Vodafone are already tucking in, Jio has been relatively quiet. Perhaps this is a bit of family respect, although we understand Anil and Mukesh Ambani aren’t exactly best mates, or maybe it has something to do with a bit of acquisition in the future.

With one brother on the up and the other finding issues in the telco space, some have might believe Reliance Communications is an acquisition target for Jio. This does kind of make sense, as Jio has not exactly created a reputation for being considerate to competitors. It was after all Jio’s aggressive pricing strategy which was the beginning of all the pain in India.

Unfortunately for some, they were not able to live with the pace of change. Telenor withdrawing, Vodafone and Idea merging and Bharti Airtel grabbing Tata Teleservices, demonstrate the consolidation trends. Reliance Communications was supposed to contribute in a more positive manner by buying Aircel, but it could be on the worse end of the deal.

Just to be clear, a Jio acquisition has not been confirmed in any way shape or form, and our sister-site Light Reading reported Reliance Communications would close most of its wireless business over the next month. Apparently, most employees have been told November 30 would be their last day, and the company’s DTH license will expire on November 21. The decision has already been made not to renew this licence.

In days gone, Reliance Communications was known to have a fairly successful 3G-dongle offering, though with the industry moving towards 4G and competitors carving into this niche, the telco has struggled. Reliance Communications has already said 4G is going to be the primary focus as “irrational pricing by all industry participants have destroyed profitability of traditional 2G/3G mobile business”. The team can complain about the underhanded nature of competitor moves if it wants, but situation is actually very simple; the industry changed, Reliance Communications didn’t, and now it is no longer competitive.

The only question which remains is what will happen to the remaining business and its small operations in the 4G space. With Bharti Airtel and Vodafone already picking away at the rotting remains of the Reliance Communications customer base, an acquisition from one of these vultures seems unlikely.

Or maybe the business will find more favour in the 4G world and continue to operate on its own? Reliance Communications has preached about a 4G-focused strategy which would optimize its spectrum portfolio, eliminating the loss-making aspects, but something needs to change. The business is not competing with the new Indian heavyweights, and the pressure of debt looks to be swelling.

Perhaps a family reunion is the most realistic chance Reliance Communications will continue to be, otherwise it will likely be a continued erosion to non-existence.

Bharti says we’ll have a bit of Tata

Rumours have been swirling for a few days and it would appear there is some substance; Bharti Airtel will absorb Tata Group’s struggling mobile business.

The acquisition is still subject to regulatory approval, however it would transfer all customers and assets of Tata Consumer Mobile businesses to Bharti Airtel. It wouldn’t necessarily be considered one of the major players in the Indian space, but Bharti will still bolster its ranks by an additional 40 million customers. Not a bad bit of business considering all past liabilities and dues to be settled by Tata.

“This is a significant development towards further consolidation in the Indian mobile industry and reinforces our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust technology and solid spectrum portfolio,” said Sunil Bharti Mittal, Chairman of Bharti Airtel.

“The acquisition of additional spectrum made an attractive business proposition. It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies.”

The merger would include assets in the 1800, 2100 & 850 MHz bands, as well as the right to use Tata’s existing fibre infrastructure. This is where Bharti will have to fork out a bit more cash however, as it would undertake a small portion of the unpaid spectrum liability.

It’s a rumour which has been around for a while, as Tata never really got going in the Indian mobile space. Aside from being a side-player in the prolonged battle between Jio and Bharti, it has also been battling minority shareholder NTT Docomo in a $1.2 billion dispute. This was an argument which was settled a few months back, but it would appear Tata just wants clear of the raging consumer mobile war. Might not be a bad move considering how slim the profit margins are looking.

While consolidation will certainly help Bharti fight back against Jio, you have to wonder whether the consumer is going to get the sharp end of the stick. Tata is just the latest brand to disappear, with Telenor exiting in February and Vodafone merging with Idea; you have to start wondering whether there are going to be enough providers around to offer variety in the second most populated country in the world.

Bharti looks to Korea for inspiration

Bharti Airtel might be involved in a drawn-out mobile slugfest with Jio, but a partnership with SK Telecom could offer a bit of breathing room for the under-pressure operator.

The partnership will work across several areas including developing bespoke software to improve Airtel’s network experience, using digital technology including machine learning, big data and building customized tools to improve network planning based on every customer’s device experience. Leaning on the experience of the facilitator of one of the worlds most advanced digital economies is not a bad idea.

“This partnership will bring a dramatically improved experience to Airtel customers in India by leveraging the expertise of a company that has built one of the best mobile broadband networks in the world,” Said Sunil Bharti Mittal, Chairman of Bharti Airtel.

“Strong partnerships have been a hallmark of Airtel’s growth journey and we are proud to have always looked ahead to bring the latest technology to India. With SK Telecom’s clear and undisputed leadership in technology, this is one partnership that will decisively change the game in India and put the country at par with the most advanced broadband nations in the world.”

Perhaps Bharti investors do not have the same poker face as Jio billionaire owner Mukesh Ambani, but this would appear to be a play for quality over quantity; Jio can continue to offer more, but our mobile broadband experience will be better, Bharti seems to be saying. It’s an interesting choice to make, and one which has split the masses for decades. Some will want more (or cheaper in this case), but some will want a better experience.

The two companies will also collaborate on an on-going basis to evolve standards for 5G, Network Functions Virtualization (NFV), Software-defined Networking (SDN) and Internet of Things (IoT), while also working together to build an ecosystem to deliver the technologies in India.

“SK Telecom will work closely with Bharti to achieve new network innovations so as to deliver a greater value to Bharti’s customers,” said Park Jung-ho, CEO of SK Telecom.

Bigger or better, the age-old question.