Bharti Enterprises, the parent company of Airtel, is foraying into the telecom manufacturing space through its joint venture with Dixon Technologies India Limited to make telecom products like modems, routers, set-top boxes and Internet of Things (IoT) devices for the country’s telecom industry, including Airtel.
Homegrown contract manufacturer Dixon said that its wholly-owned subsidiary Dixon Electro Appliances Pvt Ltd or any firm identified by the two companies would be the joint venture entity.
The joint venture will soon file necessary applications with the Indian government to avail incentives under the recently launched production incentive-linked scheme for telecom equipment and networking products.
India had recently revealed that the scheme would have an outlay of Rs 12,195 crore ($1.67 billion), and over five years, will lead to production of Rs 2.4 lakh crores ($32.88 billion) and exports of about Rs 2 lakh crore ($27.4 billion).
The Department of Telecommunications (DoT) is expected to announce vendors’ final guidelines by later this month. The PLI scheme will cover core and transmission gear, 4G/5G next-generation radio access network and wireless equipment, access and customer premises equipment (CPE), Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers etc.
“Post execution of mutually acceptable agreements by the parties, the JV Company will be 74% owned by Dixon & 26% owned by Bharti Enterprises,” Dixon said in a regulatory filing on Wednesday.
Deven Khanna, Group Director, Bharti Enterprises, said that the telecommunications sector had played a pivotal role in facilitating the economy’s growth and is a key enabler of digital connectivity and Digital India. “With Dixon’s excellent track record in the manufacturing industry & Bharti’s deep expertise in Telecom, this venture will be well-positioned to be a key player in its space,” he added.
“We see them as our ideal long-term strategic partner…we intend to leverage each other’s strengths to manufacture telecom and networking products,” Saurabh Gupta, CFO, Dixon Technologies said in a joint statement.
The partnership is in line with Bharti Airtel’s strategy to build an end-to-end product and solution ecosystem within the country. The strategy will allow the Sunil Mittal-led telecom operator to have better control over the supply chain and reduce overall network deployment costs by looking beyond traditional vendors like Nokia and Ericsson.
Airtel has set up two research and development labs involved in designing 5G, home broadband, Internet of Things (IoT) and other wireline products.
Notably, the Sunil Mittal-led telecom operator also launched its 5G-ready Internet of Things (IoT) platform for enterprises. The platform, built internally leveraging its R&D strength, offers the capability to connect and manage billions of devices and applications. It offers various connectivity options such as NB-IoT, 4G or 2G connectivity using Airtel eSIM technology.
Interestingly, the partnership with Dixon will help Airtel solve the device ecosystem challenge for its IoT business in the country. Airtel said that it is working with various startups and IoT ecosystem players to develop multiple devices and solutions jointly.
“Enterprises have three key requirements for IoT. First, connectivity solutions that future proof their device and application investments. Second, the security of their data. And third, seamless integration with existing IT systems to make the IoT data actionable. Airtel IoT is built on these insights to massively simplify the IoT journeys of enterprises,” said Ajay Chitkara, Director & CEO – Airtel Business.
India’s cellular connectivity-based IoT market is forecasted to grow to Rs 10,000 crore by 2022, driven by connected cars and appliances, Smart factories and utilities, and other use cases.