Bharti seeks to make Digital Unit a side company of Airtel, Telecom News, ET Telecom

New Delhi: Bharti Airtel, which has hosted all of its digital assets under Airtel The digital unit plans to make it a parallel entity to the phone company, opening up the possibility of monetizing a separate asset in the future, Chairman Sunil Bharti Mittal said. The new structure could remove the telecoms regulatory overhang on Airtel Digital, which could even be listed in two or three years.

In an interview with ET, Mittal said that in the future, expanding financial services – which includes the hope of becoming a small financial bank, but not a full-fledged bank – would be a big area of ​​focus. interest in the telecommunications company.

Bharti Airtel itself has become a technology company, he said, and has emerged strengthened from a bloody tariff battle since entering Reliance Jio in September 2016, with a market share of around 35% of revenues, its highest level ever. “Maybe some people underestimated his (Airtel) inner strength,” he said.

“There is now something called Airtel Digital, under which all digital entities are hosted. About 119 million monthly active users sit here… a lot of ad revenue is increasing, ”Mittal told ET. “What we are thinking about is a growing company, which will then be the holding company of Airtel and Digital … Digital could become parallel (to Airtel) … the idea is to restructure it so that we have similar results (such as investments in Jio platforms). ”

He added that the reorganization will take several months and that investments in the digital sector will be sought after its expansion. From the current Rs100 crore revenue, Airtel Digital is expected to increase to Rs 1,000 crore.

Jio Platforms, which houses the digital and telecom assets of Trusted industries, last year, received more than 1.52 crore lakh rupees in investments by selling almost 33% of the capital to 13 investors, including Facebook, Google, Intelligence and Qualcomm.

February 17 Board of Directors

But Mittal said the new structure Airtel was planning would be different from what RIL had done. The Mukesh Ambani-owned company had established Jio Platforms as a direct unit which in turn became the parent company of Reliance Jio, the telecommunications market leader in India.

“… you get a piece of what is above (Jio platforms) and therefore also a piece of Jio.” But here he (Airtel Digital) could be sitting next to (Airtel), “which would potentially mean two monetizable assets,” Mittal said. “You have a publicly traded company and you can also bring a listing here after two or three years. “

Led by Adarsh ​​Nair, Airtel Digital is home to the company’s digital properties including Wynk Music, Thanks, Xstream, Payments, and products like Airtel IQ, Safe Pay, among others, and employs over 1,500 people. , which is developing rapidly.

“Right now it’s just getting started… A lot of people, from Google, Facebook, have come back and are working in this area… IQ has been launched, Safe Pay has just been launched with a bank,” Mittal said. He said digital activity will target corporate customers and focus on “B2B2C”.

The reorganization will also ensure that digital services – which are not regulated by telecommunications licenses – do not have the regulatory weight of the telecommunications service, Mittal said. Digital service revenues will be segregated from Bharti Airtel and therefore will not be part of the calculation of Adjusted Gross Revenues (AGR), on the basis of which license fees and spectrum usage fees are paid.

Airtel announced on Friday that its board of directors will meet on February 17 to consider restructuring its business.

Speaking on the telecommunications sector, Mittal said that according to Airtel’s understanding, the telecommunications company has paid its AGR dues for the next four years, given its initial payment of Rs18,000 crore against a claim for ‘About Rs 40,000 crore.

He added that Airtel had raised $ 12 billion over the past two and a half years and had no immediate monetization needs.

But if needed, monetization options included using InvIT (infrastructure investment company) structures that raise funds while allowing operational control. “There are big assets sitting in towers: 42% in Indus Towers is worth Rs25,000 crore, so the large amount of fiber could be tens of thousands of crore.” In addition, its activities in Bangladesh are worth $ 1 billion, Mittal said.

Airtel approached the Reserve Bank of India for a small banking license, which would allow it to start lending to its customers who currently can only deposit with the payment bank. “Right now we’re just connecting other lenders to our clients, I’d rather do my own risk book, at least a little,” Mittal said. He added that the payment bank has led to the persistence of customers at Airtel and a reduction in the churn rate, or users leaving its network.

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