Why Sunil Mittal's collaboration idea could be a win-win for all telcos

Bharti Airtel Chairman Sunil Bharti Mittal recently said he has reached out to Vodafone group CEO Nick Read, asking him to step up the efforts of the promoters of Vodafone Idea to revive the flagging telco. Mittal also said he will reach out to Mukesh Ambani, Chairman of Reliance Industries and talk to him about collaborating in areas like infrastructure sharing such as fibre, data centres and market practices.

Mittal said this soon after the government announced a series of relief measures for the telcos in the form of a moratorium on AGR (adjusted gross revenues) payments, prospectively changing the definition of AGR, reducing bank guarantee requirements, among others.

Experts say there are positive and negative sides to the collaboration idea. The positives are mostly for Vodafone Idea. How? Since Vodafone Idea is under huge debt, the telco would not be in a position to invest much in 5G.

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"If by any arrangement, they can share the infra cost, especially in 5G, which, as we know, requires dense networks. For densification, telcos need extra sites. Jio is also rolling out fibre networks. In 5G, fibre is the key. If the backhaul is not fibre, the 5G doesn't work even if there's enough spectrum. From that perspective, if Jio can lease its fibre to Vodafone Idea, that could be a win-win for both," says Neil Shah, VP (Research) at Counterpoint Research.

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But what's in it for Jio and Airtel? After the relief package recently, all three telcos seem to have understood that Vodafone Idea is here to stay for some more time. Both Jio and Airtel don't want to send a message that they want duopoly. Instead, they could lend a helping hand to Vodafone Idea from the optics perspective, experts say. "It's good for the consumers and the industry if Vodafone Idea survives. Collaboration is positive for stronger entities like Jio and Airtel from a cost and optics point of view," says a telecom analyst.

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