Airtel plans data centre, fibre push as it targets next growth phase

New Delhi: Bharti Airtel will deploy upcoming capital expenditure towards rapidly increasing its data centre capacity to 1 gigawatt from 120-130 megawatt over the next few years, besides expanding fibre network in the top 400 cities, the telco told analysts on Wednesday.

India's second largest telco said it will not hold back on capex whenever there is a legitimate need to step up competitive growth, even as spending on network expansion has moderated.

Also Read: Vodafone Idea needs tariff hikes to sustain network investments: Kumar Mangalam Birla


Its data centre subsidiary Nxtra has already raised a $1 billion funding round from external investors to support the expansion. The company management said they have a clear line of sight to achieving the 1 GW target, driven by hyperscaler demand and ongoing land acquisitions in Mumbai.

Airtel is also doubling down on fixed-line services by expanding its fibre network, which offers better longevity, concurrency and lower churn, while fixed wireless access (FWA) will be restricted to areas where fibre is inaccessible.

Its aggressive low-priced customer acquisitions in the FWA segment led to higher churn, poor experience and expensive equipment retrieval, the company noted. Rising memory and chip prices also impacted unit economics in the FWA business.

Also Read: TRAI takes action against 1.83 Lakh telecom resources to curb unsolicited commercial communications

Airtel's net subscriber additions in the homes segment, at 0.5 million for the quarter, came as a result of the company pulling back its FWA rollouts, brokerage Jeffries said in a research note on Wednesday.

The telco said it will leverage the same platforms that powers its core telecom business to rapidly scale up the financial services business, which is expected to power its next phase of growth.

"Using our digital capabilities, we've proven we have a proven model to deliver lower delinquencies, lower cost of acquisition, and lower collection cost. We believe these capabilities will help us scale our NBFC and the payments bank," Gopal Vittal, executive vice-chairman, said in a post-first quarter earnings call with analysts. Vittal noted that total loan disbursements through Airtel Finance have already crossed ₹750 crore per month.

Managing director and chief executive Shashwat Sharma talked about the company's artificial intelligence (AI) capabilities, noting that it has developed a patented small language model to standardise workmanship of over 30,000 field engineers. The language model runs locally on the regular mobile handsets of the workers. "We are putting a small language model which works on the endpoint device of the engineer which runs on a regular handset. And this is a breakthrough of our engineering team which we have in house," Sharma said.