Bharti Airtel said it has expanded its broadband offering under tie-ups with local cable operators to 48 cities as of the end of September, up from 18 cities three months earlier, and will scale it up even faster in coming days.
It said it took seven eight months to get the model right, but the time invested in fine-tuning the commercial model has been worth it.
CEO Gopal Vittal said his company tested “four or five different approaches” in as many cities, trying to figure out which approach would lead to maximum satisfaction for the telecom company as well as its cable operator partners.
As the owner of Airtel Digital, one of India’s largest direct-to-home satellite broadcasting services which competes directly with cable TV, it is important for Airtel to win the trust of its cable partners.
Vittal said, Airtel has evolved a mechanism in which it is bundling not just its offerings, but also those of its partners as part of an overall service package.
“We know how to work with partners, and we believe it’s a win-win to work with partners, because the business we are is an ecosystem business,” Vittal said in his comments on the company’s July-September results.
The LCO or local cable operator partnership model is part of Airtel’s efforts to withstand competition from the rapidly expanding wired broadband service of India’s newest operator, Reliance Jio.
Jio is adding more than 1 lakh new broadband subscribers every month, and is soon expected to cross the 2 lakh/month mark, while Airtel has traditionally added only around 10,000-20,000 subscribers per month.
Having fine-tuned the LCO model, Airtel too hopes to expand its monthly broadband additions to a similar level.
However, LCOs can be temperamental, and territorial, partners.
They look upon large companies such as Airtel, Hathway and Jio with suspicion, as they fear that their roles may be dispensed with once they help these companies sign up their customers for such high-speed broadband services.
To address such concerns, Airtel has evolved a unique model under which it will let the local cable operator own and operate the last-mile connection, even though the customer-end box (modem) will be owned by Airtel. Vittal exuded confidence that his company has “perfected the LCO model”.
“We got it right, and now, we’re beginning to scale it. We’ll continue to scale it rapidly.”
STRONG DEMAND FOR WIRED BROABDAND
Like GTPL Hathway, Bharti Airtel too said there has been a strong spike in demand for reliable and consistent high-speed internet connectivity to homes due to the COVID-19 lockdown.
After decades of underperforming projections, wired broadband connectivity is “on the cusp” major breakout growth, Vittal said, thanks to demand for work from home, home-based education and on-demand entertainment and streaming.
Airtel, he said, has a four-pronged approach to catering to the demand.
“First is the rapid expansion of our own network,” Vittal said. “We added 1 mln home passes in the cities we are present in, during the quarter.
“The second is the acceleration of our LCO partnership model…Third is bringing the full power of Airtel services and partners’ services to deliver an integrated, converged offer encompassing entertainment, connectivity and more.
“Finally, [we have carried out] an adjustment in entry prices due to competitive reasons towards the end of the quarter,” he added, referring to the reduction of the price of unlimited high-speed broadband to around Rs 400 per month after a similar move by Jio.
“As a result, we saw growing momentum across the quarter, adding close to 130,000 net adds.”
5G TWO YEARS AWAY
Vittal reiterated his earlier comments that 5G is still at least two years away in India that 5G rollout in India is “still a couple of years away” for various reasons.
“No. 1 is still nascent. Device prices are anywhere between 700-1000 dollars. Applications are still being developed, because what 5G gives you is incredible speed and much lower latency,” he said, adding that such applications — remote surgery, driverless cars and so on — are not ready yet.