Bharti gives digital primacy

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Bharti Airtel has adopted the Jio model by announcing a new corporate structure under which Airtel Digital will be integrated into the listed company. This means that Airtel Digital can now sit on top of the telecom sector, with the latter being a unit of the digital business, similar to how Reliance Jio sits under Jio Platforms. All of the company’s telecom companies, including mobile, broadband, and enterprise, will now be housed in Airtel Limited, a newly formed organization that will sit under Airtel Digital.

The new structure, Bharti said in a statement on Wednesday, is expected to sharpen the company’s emphasis on driving the increasingly digital opportunity while enabling it to unlock value. Wynk Music, Airtel X stream, Airtel Thanks, Mitra Payments platform used by a million retailers, Airtel Ads, Airtel IQ, Airtel Safe, Airtel Cloud, and all potential digital products and services will be housed under Airtel Digital.

Since Jio Platforms is an unlisted company and a 100 percent subsidiary of Reliance Industries, analysts believe it could dilute stakes and attract investment from global PE firms and technology giants such as Facebook and Google. Bharti, on the other hand, will have to split the digital sector from the rest of the company at some stage. Since the digital company is part of Bharti Airtel, stake sales are only possible if an established investor dilutes their equity.

Analysts believe that by concentrating on Digital, Bharti will be able to raise its valuation, attracting investors at a later stage when the spin-off is possible. Though the company does not report the revenue generated by its digital offerings, it is currently less than 5% of total revenues.

Some observers speculate that the corporation is attempting to keep digital sales out of the adjusted gross revenue for which the government charges a license fee. The government, on the other hand, is unlikely to consent to this agreement. Only if the company is hived off the telecom business, as in the case of telecom towers, will digital revenues be beyond the scope of AGR.

For the time being, Bharti Telemedia, the company’s 100 percent owned subsidiary that provides DTH services, will coexist with Airtel Limited, according to the company. The DTH company would finally be folded into Airtel Limited to step closer to the NDCP vision of converged services for customers. Given that carriage, i.e. telecom and DTH is currently controlled and handled by two separate ministries of communications and information and broadcasting, the company has approached the government to seek clarification on licensing policy.

Airtel Payments Bank will continue to operate as a separate entity within Bharti Airtel, working closely with the company’s rising customer base to play a key role in realizing the digital potential that payments and financial services offer, according to the company.  

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