The Hindu Business Line : AirTel services outsourced to Ericsson — Bharti signs 3-year agreement for over 400 m

EVEN as a hue and cry is being raised in the west over the steady stream of BPO deals to India, in what could be termed a "reverse flow", the first of its kind in the country, Bharti TeleVentures Ltd has announced a three-year agreement to outsource the management, maintenance and service quality assurance in 10 existing and three new AirTel networks to Ericsson for over $400 million.

The deal also includes network deployment by the Swedish telecom equipment major.

Speaking to newspersons, Mr Akhil Gupta, Joint Managing Director, Bharti, said: "The agreement will further enhance the quality of service and standards on AirTel networks. The initiative will result in providing congestion-free networks with seamless coverage and enhanced quality in over 1,650 towns and cities across 13 circles."

He added: "The move will benefit more than four million existing AirTel customers and the new customers added in coming years in these circles."

The agreement with Ericsson is all-encompassing and envisages management, maintenance, quality assurance and capacity expansion of AirTel networks in the circles.

The scope extends to AirTel's existing circles of Delhi, Haryana, Punjab, Himachal Pradesh, Uttar Pradesh (West), Andhra Pradesh, Tamil Nadu, Chennai, Karnataka and Kerala and the three new circles of Rajasthan, Uttar Pradesh (East) and Jammu and Kashmir.

"The partnership is set to enable AirTel to channel its resources and expertise to its core areas of product innovation, value-added services, marketing, branding and pricing, while simultaneously providing world-class mobile services by leveraging Ericsson's expertise in network management," Mr Gupta said.

The contract amount is backed by a project funding agreement with Swedish export credit agency, EKN.

The overall cost of funding including hedge cost is about four per cent per annum.

As part of the agreement, Ericsson will continuously deliver equipment and services based on Bharti's capacity requirements, improving efficiency by eliminating overlap and duplication of roles between the two companies as well as securing cost-efficient roll-out and provision of on demand capacity.

The agreement also specifies that payments to be made by Bharti to Ericsson would be linked to annual capacity utilisation.

The agreement also provisions for taking over close to 250 Bharti employees by Ericsson.

Mr Jan Campbell, Managing Director, Ericsson India, said: "This is yet another step at redefining the entire approach to the provisioning of mobile services in India. Bharti is now the first telecom service provider to consider and implement a service model that is fast becoming a reality in the most developed economies."

Mr Gupta also said that the company plans to raise $500 million in offshore debt in the coming fiscal to fund capital expenditure and retire debt.

While the finer details are yet to be worked out, the process could involve a combination of syndicated loans and bonds.

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