The Economic Times
, Indian telco Bharti Airtel is set to acquire complete ownership
of its joint venture (JV) with
Alcatel Lucent SA
). This joint venture primarily manages the fixed-line and
broadband networks for Airtel. The financial terms of the deal
were not disclosed.
Bharti and Alctael had formed a 26:74 joint venture (Alcatel
Lucent Managed Networks Service India) for five years (beginning
in 2009 and through 2014). Bharti Airtel intends to operate as an
independent entity, but moving forward, the company stated that
it would invite other telecom operators for equity
We note that the decision comes shortly after its close rival
Reliance Communications signed a similar contract with Alcatel
for eight years.
It is believed that this strategic decision of acquiring the
entire 74% stake is a part of the company's business objectives,
as Bharti Airtel is in the process of reducing outsourcing. Apart
from Alcatel, Bharti has multi-billion dollar contracts with
other big technology providers of the mobile network industry
(Nokia-Siemens Network) (
Bharti Airtel mentioned that it is planning a new business
model to manage its fixed line and broadband networks, similar to
Indus Towers. Indus Tower was formed in 2008 by three telecom
majors namely; Bharti Airtel, Vodafone India and Idea Cellular.
These three companies had combined their physical infrastructure
in 16 regions to form Indus Towers.
However, Alcatel is also not at a complete loss since it has
been trying to exit certain outsourcing contracts. This is
because, according to the company, just 25% of its total
outsourcing contracts is profitable, which put tremendous
pressure on its margins.
Alcatel carries a Zacks Rank #5 (Strong Sell).
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