Ahead of Reliance jio, Bharti Airtel’s Rs 60,000 cr leap of faith

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New Delhi | Updated: Dec 01, 2015 1:21 AM

Signalling that it is geared up to face even higher competition with the imminent entry of Reliance Jio in the telephony space and that it is serious to take on the challenge of call drops, the country’s largest telecom operator Bharti Airtel on Monday said that over the next three years its capital expenditure in network will rise by a whopping 25% to Rs 60,000 crore.

BHARTI AIRTELThe investment will enable Bharti Airtel’s customers to avail broadband speeds of 50 Mbps from the current 16 Mbps by 2016. In addition, Bharti plans to offer speeds of up to 100 Mbps through its fibre-to-home network. (PTI)

Signalling that it is geared up to face even higher competition with the imminent entry of Reliance Jio in the telephony space and that it is serious to take on the challenge of call drops, the country’s largest telecom operator Bharti Airtel on Monday said that over the next three years its capital expenditure in network will rise by a whopping 25% to Rs 60,000 crore.

Currently, the company’s annual capex is around R16,000 crore, which would go up to R20,000 crore. This amount would be largely towards upgrading and modernising its network and only a minuscule portion will go towards spectrum purchase, Gopal Vittal, MD and CEO (Indian & South Asia), said at a press conference.

relaince-jio

The R60,000 crore will be over and above the R65,000 crore the company has spent so far towards purchase of spectrum in around five rounds of auctions since 2010. The company’s total investment so far is R1.60 lakh crore. The bulk of this amount is in network since minus the R13,000 crore the company paid upfront during the 2010 auctions to buy 3G spectrum, the payment for subsequent spectrum acquisition is through a deferred payment scheme.

“Project Leap is a 10-point programme which will transform Airtel’s network,” Vittal said. Under the programme, the company will double its base stations from 1.60 lakh currently over the next 10 years. Massive modernisation of networks, upgrading of copper line, swapping out legacy networks, massive reduction in carbon footprint by 70% and enabling customers to understand the project are some of the other initiatives under the project.

Vittal said the company would fund most of its investments through cash accruals.

The investment will enable Bharti Airtel’s customers to avail broadband speeds of 50 Mbps from the current 16 Mbps by 2016. In addition, Bharti plans to offer speeds of up to 100 Mbps through its fibre-to-home network.

Reliance Jio, which is expected to launch its commercial services by the end of the current calendar year, has galvanised incumbent operators as it is after more than a decade that they face serious competition from a player having deep pockets and a pan-India presence. Vodafone India also recently announced fresh investment of Rs 13,000 crore for capacity augmentation and new business initiatives in India.

Its investment will be used to set up a new data centre in the country and to expand its network to offer payments bank services. The company will also upgrade its existing telecom infrastructure.

Since Jio will be offering 4G services, incumbents like Bharti have already launched similar services across some 290 cities in the country. Vodafone plans to launch the same by the end of next month and Idea Cellular in the first half of the next calendar year. In fact, Idea has just acquired liberalised spectrum in the 1800 MHz band from Videocon Telecommunications in two of its important circle — Gujarat and Uttar Pradesh (West) — to offer 4G services.

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