Global Insight Perspective | |
Significance | Bharti's network agreement with Nokia follows a US$1 billion network contract awarded by the operator to Ericsson in August. |
Implications | India's largest mobile operator is marching into remote and rural markets aggressively, with rapid network expansion and attractive tariff. |
Outlook | Bharti will continue to benefit from its network leadership across the country. Nevertheless, the operator will also see increasing competition from smaller rivals, who also have ambitious plans to grab a bigger market presence. |
Based on a three-year contract, Nokia will provide managed services and expand Airtel networks to cover all towns and cities in the eight telecoms circles of Mumbai, Maharashtra & Goa, Gujarat, Bihar (including Jharkhand), Orissa, Kolkata, West Bengal and Madhya Pradesh (including Chattisgarh). The network monitoring operations will be carried out from Nokia’s Global Network Services Centre in Chennai. Nokia will also deploy its WAP solution across Airtel’s national network to enhance its mobile packet core network capabilities. The WAP gateway to be implemented by Nokia will enable easy usage of data services, thereby increasing the consumption of content on the Airtel network. Nokia will provide consulting services and integrate the WAP gateway into a multi-vendor environment.
Outlook and Implications
- Bharti's Network Leadership: The network agreement with Nokia will enable Bharti to expand further into rural and remote areas, as well as enhancing the data experience of its existing customers. The operator also recently awarded Ericsson an estimated US$1 billion contract to expand its GSM/GPRS networks to all towns and cities in 15 regions (see India: 24 August 2006: Ericsson Wins US$1-bil. GSM/GPRS Network Contract from Bharti Airtel). Bharti's network leadership across India is a critical driver of its success. The country's largest mobile operator by subscribers added a net total of about 4 million mobile subscribers in the quarter ending September 2006. Its mobile subscriber base reached 27.06 million at the end of September, up 92% from a year earlier (see India: 27 October 2006: Bharti Airtel Q2 Net Profit Up 79% Y/Y on Subscriber Gains).
- Growth Potential in Remote and Rural Markets: The fact that Bharti's subscriber growth during the July-September quarter was mainly driven by new customers from smaller towns and cities across the country, again, indicates the growth potential of rural and remote markets. Penetration in India's rural parts currently stands at around 2%, compared to over 30% in urban areas. Although significant potential for further subscriber growth still remains in India's mobile market, it is likely that the bulk of such growth will be driven by net additions in the remote and rural markets. In addition to Bharti, a number of mobile operators have over the last few months announced initiatives to expand operations for bigger market presence (see India: 10 October 2006: Motorola to Challenge Disqualification from BSNL GSM Tender, India:8 September 2006: Reliance Seeks Approval for Wide-Scale GSM Deployment, India: 7 September 2006: Malaysia's Maxis Expects US$300-mil. Investment for Indian Expansion, and India: 5 September 2006: Spice Telecom Seeks Expansion with US$2.5-bil. Investment). In addition, the Indian government has decided to extend financial support from the Universal Service Obligation (USO) Fund to mobile operators to create infrastructure in rural and remote areas. This will provide operators with further incentive for network expansion into currently under-served markets (see India: 17 October 2006: Government of India to Expand USO Fund to Improve Rural Mobile Infrastructure).