Cloud network alliance in works, a deal will raise the stakes amid Jio battle
Top executives of China Mobile met senior officials of Bharti Airtel and Vodafone Idea separately in December
NEW DELHI :
China’s largest mobile operator, China Mobile, is keen to enter the Indian market and has held early stage talks with telecom service providers Bharti Airtel Ltd and Vodafone Idea Ltd to jointly develop a cloud network here.
“The top executives of China Mobile met senior managements of Bharti Airtel and Vodafone Idea separately in December. China Mobile is interested in the Indian market and wants to come as a holding company with either of these two companies or even both," a person aware of the matter said, requesting anonymity.
A holding company owns sufficient voting stock in another company to enable it to control the latter’s policies and oversee management decisions. Though it owns the assets of other firms, it does not actively participate in day-to-day business operations.
“China Mobile has grown the cloud space in its home market and is now scouting for investment opportunities overseas. It has initially proposed a structure which is similar to what Singtel has with Airtel, but for growing the cloud services market here," the person cited above said. Bharti Telecom is the single-largest shareholder in Bharti Airtel with about 41% stake. Singtel owns 48% in Bharti Telecom, which gives it a 35% stake in Bharti Airtel.
China Mobile Investment Holdings Co. Ltd, the investment arm of China Mobile, was established in 2016 as an independent entity to look at investment opportunities and manage its portfolios.
Emails sent to China Mobile and Bharti Airtel remained unanswered at press time. Vodafone Idea said it does not comment on speculation.
State-owned China Mobile is the largest wireless carrier in the mainland with 930 million mobile customers and 170 million wireline customers. It offers data services, wireless data traffic services, mobile data solutions, telecommunications network planning design and consulting services, and technology support.
If the talks end in an equity investment, it will give the two Indian operators the financial muscle to fight Jio in the competitive telecom battleground and offer cutting-edge cloud services to accommodate increasing digitization and the roll-out of5G technology which entails storing large amounts of data on the cloud.
India’s telecom sector witnessed large-scale disruption upheaval after the entry of Jio, a subsidiary of Reliance Industries Ltd, in September 2016, with data prices plunging to rock bottom.
Following this, half-a-dozen companies either shut shop or were acquired by bigger players. The domestic telecom market is now largely a three-way tussle between Bharti Airtel, Vodafone Idea and Jio.
Bharti Airtel already offers cloud services under ‘Airtel Business’ even though mobile services fetch most of its revenue. Airtel’s wholly-owned data centre unit, Nxtra Data Ltd, is on an expansion spree with 10 new data centres being planned to cater to demand from content players and big cloud service providers.
In June 2019, Vodafone Idea Business Services tied up with Microsoft to help firms adopting hybrid and cloud-based models to host their applications.
If a deal materializes, it would also bode well for China Mobile which has been hunting for investment avenues given an almost saturated domestic market.
China Mobile, which earns almost all its business income in China, wants international operations to contribute around 10% of revenue by 2023, Nikkei reported in August 2019, quoting company officials.
The report also quoted China Mobile chairman Yang Jie as saying the years between 2020 and 2022 will be the “peak period" for China Mobile’s investments in the 5G roll-out.
In 2014, China Mobile bought an 18% stake in Thai telecom group True Corp., owned by billionaire Dhanin Chearavanont’s Charoen Pokphand Group, for $881 million.