Shapes of things to come - Vodafone & Bharti enter into deal to share backhaul

Vodafone CEO Arun Sarin, in his webcast address on Monday said that infrastructure sharing would enable the UK-based major to save over $1 billion over the next 5 years and also contribute to an addition of 1.5% to its EBITDA margins. In its deal with Bharti, Vodafone has suggested sharing of infrastructure with Bharti. With Bharti and Vodafone having taken the concept of infrastructure sharing to the next level, all eyes are now on the Telecom Regulatory Authority of India. This is because Indian telecom companies are not allowed to share active infrastructure such as optic and feeder fibre cables, radio links, network elements, backhaul, antenna and transmission equipment. At present, Indian telecom companies are permitted to share only passive infrastructure such as towers, repeaters, shelters and generators. But Trai in its upcoming recommendations is likely to suggest that these norms be relaxed.

This concept can translate into big capex and opex savings only if telecom companies are allowed to share both active and passive infrastructure. Trai as well operators feel an extended version of the concept, where radio access networks of operators are shared, can lead to better utilisation of network resources as well as offer increased intra-circle roaming. While passive sharing enables telecom companies to share over 30% in both capex and opex spendings, service providers said that this figure could touch 50% if active infrastructure sharing is allowed.

Active infrastructure sharing will enable operators to provide mobile services to their subscribers wherever their own network signal is not available and help them increase their coverage area and quality of service (QoS) with almost no additional expenditure. Sources also said Trai is examining whether license condition needs to be modified to permit resale of point-to-point bandwidth for limited purpose of backhaul sharing.

Put simply, the savings will not be so significant and Bharti Airtel and Vodafone be able to roll-out joint networks in virgin areas if active infrastructure cannot be shared by operators. Little wonder that Bharti in its communication to Trai on this issue has pointed out that "while, existing license conditions allow passive infrastructure sharing among service providers, however, it has not helped actually translating it into infrastructure sharing to the desirable extent.