Bharti Airtel to buyout Alcatel Lucent’s 74% stake in Indian managed services JV

Four years after outsourcing its fixed line and broad services management business to a joint venture with Alcatel Lucent, Bharti Airtel is buying out its foreign partner and is now planning to make it a non-captive business unit. The firm disclosed it is buying out majority stake held by Alcatel Lucent in 26:74 JV Alcatel Lucent Network Managed Service India Ltd for an undisclosed amount.

Alcatel Lucent Network Management Services has a five year contract ending April 2014.

It said the entity would operate independently and going forward it would invite other telecommunications operators for equity participation and bring the management of their broadband and fixed-line networks under the entity.

This would be similar to Bharti’s two-pronged strategy in running its tower business, which is partly housed under majority owned public listed firm Bharti Infratel and partly under an operator agnostic firm Indus Towers. Bharti Infratel has 42 per cent stake in Indus, in which Vodafone holds another 42 per cent and Aditya Birla Telecom owns the rest 16 per cent.

As a part of the stake acquisition in the JV with Alcatel Lucent, Bharti Airtel's CEO (Upper North), Shishir Kumar, will join the board of the firm as its CEO.

"Bharti pioneered the outsourcing model that helped revolutionise the telecom industry and with this innovative model we are breaking new ground in an industry which is on thecusp of massive data growth. This new model, along with our recently launched Network Experience Centre, will provide us greater control over the delivery of a world-class data experience to customers across our portfolio of networks," said Bharti Airtel, CEO (India & South Asia), Sanjay Kapoor.

Kapoor is on his way out of the firm after a top management reshuffle.

“We are extremely proud that the joint venture was a catalyst in transforming Bharti's Telemedia business at an accelerated pace and setting the stage for the next stage of transformation. The formation of this new model is a step in that direction and will leverage the core competencies that Alcatel Lucent Managed Network Service India has built over time,” said Munish Seth, president and MD of Alcatel Lucent India.

Shares of Bharti Airtel closed at Rs 324.55, down 1.93 per cent, in a weak Mumbai market on Tuesday.

The JV was formed in 2009 to manage Bharti Airtel’s pan-India broadband and telephone services and help Airtel’s transition to next generation networks. The idea was to leverage Alcatel-Lucent’s expertise in IP transformation and network management while allowing Airtel to focus on customer delivery and market growth.

The managed services partnership included all end-to-end activities – service rollout, installation and fault repair, service continuity and transformation. The partnership was also structured to drive optimal capital investment and increase operational efficiency by moving voice and data traffic onto a single, 'packetized' infrastructure.

(Edited by Prem Udayabhanu)

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