AlcaLu, Bharti Form Joint Venture

April 30, 2009 Catherine Haslam on www.lightreading.com

Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Alcatel-Lucent (NYSE: ALU) have formed a joint venture company to manage the future development and operation of the carrier’s fixed voice and broadband networks.

The new legal entity will be operated by AlcaLu, which will hold a 74 percent stake, with Bharti Airtel owning the remaining 26 percent. An AlcaLu spokesman confirmed to Light Reading that the business AlcaLu will generate from the new venture will be worth $500 million over a five-year period.

The new venture will be responsible for the design, planning, deployment, optimization, and management of Bharti Airtel’s fixed line network, which is being migrated toward an IP-based infrastructure.

AlcaLu’s role will include the management of equipment from other vendors, such as UTStarcom Inc. (Nasdaq: UTSI), which provides equipment for Bharti’s emerging IPTV business. (See Bharti Profits From Mobile Boom.)

AlcaLu would not comment on whose equipment it would be managing or how, beyond saying that the company has considerable experience managing multi-vendor networks.

The joint venture will be staffed by employees from Bharti, who will provide knowledge of the existing network and the local market, and AlcaLu, plus some new hires.

Bharti Telemedia, the Airtel division responsible for its fixed-line network, offers DSL-based broadband services in 95 cities, has nearly 1.1 million broadband subscribers, and is activating more than 100,000 new broadband connections each month. At the end of March, India had 6.22 million broadband subscribers.

Speaking yesterday as the company’s results were announced, Airtel’s CEO Manoj Kohli explained that the company’s fixed-line strategy is to concentrate on upgrading services in the 95 cities in which it operates, and that it doesn’t have plans to expand its coverage beyond them. This focused approach is helping Telemedia increase its subscriber base — it currently has 2.7 million customers, about 19 percent more than a year ago — and generate monthly ARPU (average revenue per user) of 1,071 Rupees ($21.44).

Bharti is hoping the new relationship will help it cut operating costs and speed up its ability to offer more advanced multimedia services for its retail and business customers.

This is the fourth managed network services deal AlcaLu has signed with a fixed-line carrier during the past 18 months, suggesting growing support for the outsourcing model that has gained favor primarily amongst mobile operators.

The three other agreements are with Brazil Telecom, BT Global Services , and Telecom New Zealand Ltd. (NYSE: NZT; New Zealand: TEL). AlcaLu also has arrangements with mobile operators, including Reliance Communications Ltd. in India, with which the vendor has also formed a joint venture. (See BT Outsources Ops to AlcaLu, Kiwis Pick AlcaLu, and AlcaLu, Reliance Form Joint Venture.)

In total, around 180 million fixed and mobile subscribers are connected to networks managed by AlcaLu, although Bharti Airtel’s mobile networks are managed by Ericsson AB (Nasdaq: ERIC) and Nokia Siemens Networks.

ITC picks up Nokia’s global packaging deal

11 Apr 2009, 0316 hrs IST, Anuradha Himatsingka & Kalyan Parbat, ET Bureau

KOLKATA: It has remained a well kept secret for a while. ITC is now the principal supplier of value-added packaging material and box cartons for every Nokia cellphone that gets shipped to as many as 50 countries from the Finnish telecom giant’s Chennai factory.

Nokia has silently inked a bulk purchase agreement with the $4.75-billion plus cigarettes-to-hotels conglomerate, wherein ITC is now the prime vendor of packaging material and customised microfluted cartons for all Nokia phones and accessories manufactured in Channai.

When contacted, both Nokia India and ITC confirmed the development. According to a Nokia India spokeswoman: “The decision to enter into a global purchase pact with ITC for packaging cellphones manufactured in Chennai is part of Nokia’s global sourcing strategy, wherein the packaging material and box cartons are procured from a local supplier near to its handset manufacturing plant. We can’t share commercials but such international purchase agreements are reviewed periodically.”

As Nokia phones shipped from Chennai hit several global retail points in 50 countries, ITC has to manufacture boxes that meet the Finnish player’s stringent quality standards. “Since all sales boxes and the larger shipping cartons supplied by ITC will carry the Nokia brand and hit several of our international retail points, quality consistency is critical. The boxes will also need to have very high grade image graphics and texture,” said Mr Josh Foulger, who is Nokia’s national sourcing head for India.