Bharti Airtel, India’s second-largest telecom operator, on Wednesday introduced a new corporate structure and said that the move aims to sharpen its focus on tapping the digital opportunities while enabling it to unlock value.
Notably, Reliance Industries Limited had in 2019 restructured its digital business into one consolidated wholly-owned subsidiary – Jio Platforms – which houses all digital initiatives, including applications, tech initiatives, and connectivity services like mobile and broadband. After the restructuring, Jio Platforms raised funds from global investors and technology players like Facebook, Google, Qualcomm and Intel.
Ambit Capital recently noted that unlike Mukesh Ambani’s Jio, which is considered much beyond a telco due to its linkage to large projects like JioMart, investors think of Airtel as ‘just a telco’, which reflects in its valuation.
Market analysts said that Airtel is looking to replicate Jio’s strategy by driving the country’s rapidly unfolding digital opportunity.
The new structure involves Airtel Digital Limited folding into the listed entity Bharti Airtel, which will now house all the digital assets and businesses.
The Sunil Mittal-led telco has various digital businesses such as Wynk Music, Airtel X stream, Airtel Thanks, Mitra Payments platform for retailers, Airtel Ads, Airtel IQ, Airtel Secure and Airtel Cloud.
Airtel said that the listed entity will also house all future digital products and services.
The telecom businesses comprising mobile, home broadband and enterprise will be housed in a newly created entity, Airtel Limited, a wholly-owned subsidiary of Bharti Airtel Limited.
“The new structure sets the exciting future course for Bharti Airtel and provides focus on the four distinct businesses – Digital, India, International and Infrastructure, each, in a razor-sharp way,” Sunil Bharti Mittal, Chairman, Bharti Airtel said in a statement.
He added that the structure would provide agility, expertise and operational rigour to serve customers “brilliantly” while providing flexibility to unlock value for the company’s shareholders.
“This structure will serve us well over the coming years and is a win-win for all stakeholders,” he further added.
The company’s direct-to-home or DTH arm, Bharti Telemedia, will sit alongside Airtel Limited for now. “It is intended to eventually fold the DTH business into Airtel Limited to move towards the NDCP vision of converged services to customers,” the company said, explaining the structure.
Bharti Airtel has approached the Indian government to seek clarity on licensing policy given that carriage that is telecom and DTH is currently being regulated and managed under two separate ministries of communications and I&B, respectively.
Airtel Payments Bank, the payments services subsidiary, will remain a separate entity under Bharti Airtel. “…it will work closely with the growing customer base to play a pivotal role in realising the digital opportunity that payments and financial services provide,” it said.
The company’s infrastructure businesses, such as Nxtra and Indus Towers, will continue to remain separate entities as they are currently. Nxtra Data is the data centre arm of Airtel. It said that the same would be the case with international subsidiaries and affiliates like Airtel Africa, Network i2i Limited (submarine cables and foreign investments), Bharti Airtel Lanka (Sri Lanka) and Robi Axiata Limited (Bangladesh).
“The Board in its meeting held today approved the scheme enabling the company to file for all statutory approvals to give effect to the proposed rearrangement,” Airtel said in a press statement on Wednesday evening.
Bharti Airtel has been making efforts to build its new digital businesses in the areas of digital advertising (Airtel Ads), cybersecurity and cloud communications (Airtel IQ). It is also building new data centres through its subsidiary Nxtra Data.
In the last year, Airtel launched its security intelligence centre with an investment of Rs 100 crore ($13.7 million) and entered into partnerships with Cisco, Vmware, Radware and Force point to offer cybersecurity solutions. It also entered into a strategic deal with Amazon Web Services (AWS) to offer cloud solutions to large enterprise and small and medium enterprise (SME) customers in India.