Airtel and Aircel look to leverage 4G networks to grow enterprise businesses

NEW DELHI: Bharti Airtel, India’s largest telecom operator, and its smaller rival Aircel are looking to leverage their 4G networks to grow their respective enterprise businesses which generate much higher margins than services to retail customers.

The two operators are currently the only providers of 4G services in India. While Airtel has made its 4G network available to retail consumers Aircel currently offers 4G services only to enterprise customers.

Manish Prakash, director of Airtel Business, said the company will integrate the 4G offering as a last mile with its enterprise class network and come up with solutions that help leverage the 4G network.

“We are developing last mile enterprise class data applications that can run on 4G, which will give Airtel a strong competitive advantage in the market,” he said. Airtel Business is the enterprise division of Bharti Airtel. Prakash said that 4G will be the key lever for Airtel to expand its enterprise business, as it will enable the company to cover rural areas as well, enabling last-mile coverage. He added, “The reach will be far more extensive than our wireline network. It will also bring agility in our operations.”

Airtel Business reported revenues of Rs 1,617.7 crore for the quarter ended December 2014, contributing 10% to the company’s overall revenue.

Aircel, on the other hand, is creating LTE-powered, high-speed secure VPN (virtual private network) link for its enterprise users, instead of giving them lease lines and microwave links.

“We are bringing together all the enterprise customers and putting them on a high-speed link to provide them with very high quality data speeds,” said Sameer Dave, Aircel’s chief technology officer.

Aircel, an unlisted company, does not provide any financial numbers. The company is currently providing 4G LTE (long term evolution, a mobile communication standard) services to its large customers in multiple verticals, including pharmaceuticals, FMCG and banks. “Our partner banks, for instance, are connected with their branches and large regional offices using our 4G LTE network in circles where we have licence. In other areas, we are connecting them with 3G network,” Dave said.

Airtel currently offers 4G services across 15 cities on the 2300 MHz spectrum band and is expected to expand its 4G network extensively this year while Aircel possesses 4G licences in eight circles and has launched commercial services in six circles.

The enterprise segment will benefit the most from 4G services in the country, given the high bandwidth internet capability supported by such services. “Bandwidth hungry applications like videobased solution, security and monitoring solutions, home automation and healthcare can be built on the top of a 4G network. Multiple corporate applications can connect and work seamlessly using the 4G technology that offers high bandwidth,” an analyst said.

The enterprise segment is becoming one of the focus areas for most telecom operators in India, as they eye better margins compared to retail voice and data services. Some industry experts put the operating margin in this business at as high as 50%, compared to 30-35% overall margins for telecom operators.