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Kenya’s Ajua acquires WayaWaya to consolidate consumer experience play in African SMEs
Kenyan consumer experience platform for businesses in Africa, Ajua today announced that it has acquired WayaWaya, a Kenya-based AI and ML messaging and payments company.
WayaWaya’s customers and partners include the likes of I&M Bank, Interswitch and MTN. The company offers a range of services, from digital banking and payment services to financial services APIs and payment bots.
According to Ajua, the acquisition is primarily focused on WayaWaya’s payments bots system known as Janja. The platform, which has customers like Airtel, Ezee Money, Housing Finance Company of Kenya (HF Group), enables borderless banking and payments across apps and social media platforms. Teddy Ogallo, the entrepreneur who founded WayaWaya, joins Ajua as VP of Product APIs and Integrations.
Per Crunchbase, WayaWaya has just raised $75,000. Although the two companies did not disclose the financial details of the acquisition, Ajua is expected to have paid 10 times more than WayaWaya’s total raise.
Ajua, formerly mSurvey, was founded in 2012 by Kenfield Griffith. The company is solving a consumer data problem for African businesses to understand their business better and drive growth.
“There’s a lot of commerce happening on the continent and Ajua wants companies to move from transaction numbers to the customers behind such transaction,” Griffith told TechCrunch. “Imagine if we knew what drove consumer habits for businesses. I mean, that’s a huge exponential curve for African businesses.”
Teddy Ogallo (Founder, WayaWaya) & Kenfield Griffith (CEO, Ajua)
Nigeria’s SME market alone is valued at $220 billion annually. And while businesses, mostly big enterprises, can afford customer communication tools, a large segment of small businesses are being left out. Ajua’s play is to use data and analytics to connect companies with their customers in real time. “We’ve taken what makes enterprise customers successful, and we’re capturing it in a simple format so SMEs can have the same tools,” Griffith added.
Since most consumer behavior for these SMEs happens offline, Ajua gives businesses unique USSD codes to receive payments, get feedback and offer discounts to their customers. It is one of the products Ajua has launched over the years for customer feedback at the point of service to businesses that cumulatively have over 45 million customers.
The company’s partners and clients also include Coca-Cola, FBNQuest, GoodLife Pharmacy, Java House, Safaricom, Standard Chartered and Total.
As an intelligent messaging bot, Janja is used by individuals and businesses across WhatsApp, Facebook Messenger and Telegram to automate customer support and make cross-border payments. So, Janja’s integration into Ajua’s product stack will close much of the acquirer’s customer experience loop by automating responses and giving customers what they want, when they want it.
This acquisition comes a month after Ajua announced that it partnered with telecom operator MTN Nigeria to launch a customer management product for Nigerian businesses. The product called MTN EnGauge carries the same features present in Ajua but, in this case, is tailored solely for businesses using the MTN network. The roll-out is expected to generate more data for Ajua’s thousands of users. It will also be upgraded to incorporate Janja and other services.
In hindsight, it appears Ajua could have created a product like Janja in-house due to its vast experience in the consumer experience space. However, the company chose an acquisition and Griffith gave two reasons why — building a similar product would have taken a long time and Ogallo seemed to know Janja’s business and operations so well, it just made sense to get him on board.
“Teddy was going the same direction we’re going. We just thought to acquire WayaWaya instead and make a really good company out of both products attempting to solve the same problem. To me, it’s all about solving the problem together rather than going alone,” said the CEO.
On why he accepted the acquisition, Ogallo, who now has a new role, noted that Ajua’s ability to scale customer service and experience and also help businesses was one reason and earned admiration from him. “Seeing how WayaWaya’s technology can complement Ajua’s innovative products and services, and help scale and monetize businesses, is an exciting opportunity for us, and we are happy that our teams will be collaborating to build something unique for the continent,” he added.
This is a solid infrastructure play from Ajua coming from a founder who is a massive advocate of acquisition and consolidation. Griffith believes that the two are strategies for a speedier route to new markets and channels in Africa.
“I think there are lots of ways we can build the ecosystem. There are lots of young talent building stuff, and they don’t have access to capital to get to the next stage. The question is if they want to race to the finish line or take off time and get acquired. I think there’s a huge opportunity in Africa if you want to solve complex problems by acquisition.”
There has been an uptick in local acquisitions in Africa from startups within a single country and between two countries in the past three years. For the former, Nigerian recruitment platform Jobberman’s acquisition of NGCareers last year comes to mind. And there are pan-African instances like Lagos-based hub CcHub’s acquisition of iHub, its Nairobi counterpart; Ethiopian software provider Apposit sell-off to Nigerian fintech Paga; and Johannesburg-based fintech MFS Africa acquiring Uganda’s Beyonic.
The common theme among the acquisitions (and most African acquisitions) is their undisclosed sums. For Ajua, Griffith cited regulatory issues as one reason why the company is keeping the figure under wraps.
Since launching nine years ago, Ajua has raised a total of $3.5 million, according to Crunchbase. Given the nature of this acquisition and partnership with MTN, the company might set sights on another fundraise to scale aggressively into Nigeria (a market it entered in 2019) and other African countries.
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Reliance’s Jio Platforms says it will roll out 5G in second half of 2021
Reliance’s Jio Platforms, the largest telecom operator in India, plans to roll out a 5G network in the country in the second half of 2021, top executive Mukesh Ambani announced on Tuesday.
“India is today among the best digitally connected nations in the world. In order to maintain this lead, policy steps are needed to accelerate early rollout of 5G, and to make it affordable and available everywhere. I assure you that Jio will pioneer the 5G revolution in India in the second half of 2021,” said Ambani, who controls Jio Platforms’ parent firm Reliance Industries, at a trade conference.
The announcement comes as a surprise as India has yet to grant spectrum for 5G network to telecom networks in the country. At this moment, it is also unclear when India will begin auctioning the 5G spectrum.
Ambani, who is India’s richest man, said he was hopeful that the rollout of 5G network in India will enable the world’s second-largest internet market to lead what he termed as the fourth industrial revolution. “Jio Platforms, with its family of over 20 startup partners, has built world-class capabilities in artificial intelligence, cloud computing, big data, machine learning, internet of things, blockchain, etc.,” he said.
The telecom operator, which has raised over $20 billion this year from a roster of high-profile investors, including Facebook and Google, said the company is also hopeful that its bouquet of services in education, healthcare, financial services and new commerce categories “once proven in India, will be offered to the rest of the world to address global challenges.”
Gopal Vittal, the chief executive of Airtel (India’s second-largest telecom operator), said the company was hopeful that India would have established a nationwide 5G network in two to three years. He, however, did not share a timeline for when the rollout of 5G on his network would begin. (In a recent earnings call, Vittal had warned that the proposed price of the spectrum of 5G was “very, very expensive” — something that won’t support any kind of business model.)
During his speech, Ambani also urged industry players to rely on locally produced hardware and components. “As the digitalisation of the Indian economy and Indian society picks up speed, the demand for digital hardware will grow enormously. We cannot rely on large-scale imports in this area of critical national need.”
Airtel has previously said that it is open to the idea of collaborating with global firms for components. “Huawei, over the last 10 or 12 years, has become extremely good with their products to a point where I can safely today say their products at least in 3G, 4G that we have experienced is significantly superior to Ericsson and Nokia without a doubt. And I use all three of them,” said Sunil Mittal, the founder of Airtel, at a conference earlier this year. In the same panel, U.S. commerce secretary Wilbur Ross had urged India and other allies of the U.S. to avoid Huawei.
Vittal today also urged that India should adopt the global 5G standard. “There is sometimes talks that India must have its own 5G standard. This is an existential thread which could lock India out of the global ecosystem and slow down the pace of innovation. We could let down our citizens if you allow that to happen.”
On today’s panel, which was attended by Mittal as well as Indian Prime Minister Narendra Modi, Ambani said stakeholders also need to think about ways to serve nearly 300 million people who are still on 2G networks in India. “Urgent policy steps are needed to ensure that these underprivileged people have an affordable smartphone, so that they too can benefit from Direct Benefit Transfer into their bank accounts, and actively participate in the Digital Economy,” he added.
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India’s Razorpay becomes unicorn after new $100 million funding round
Bangalore-headquartered Razorpay, one of a handful of Indian fintech startups that has demonstrated accelerated growth in recent years, has joined the coveted unicorn club after raising $100 million in a new financing round, the payments processing startup said on Monday.
The new financing round, a Series D, was co-led by Singapore’s sovereign wealth fund GIC and Sequoia India, the six-year-old Indian startup said. The new round valued the startup at “a little more than $1 billion,” co-founder and chief executive Harshil Mathur told TechCrunch in an interview.
Existing investors Ribbit Capital, Tiger Global, Y Combinator and Matrix Partners also participated in the round, which brings Razorpay’s total to-date raise to $206.5 million.
Razorpay accepts, processes and disburses money online for small businesses and enterprises. In recent years, the startup has expanded its offerings to provide loans to businesses and also launched a neo-banking platform to issue corporate credit cards, among other products.
Mathur and Shashank Kumar (pictured above), who met each other at IIT Roorkee, started Razorpay in 2014. They began to explore opportunities around a payments processing business after realizing just how difficult it was for small businesses such as young startups to accept money online less than a decade ago. There were very few payment processing firms in India then, and startups needed to produce a long list of documents.
The early team of about 11 people at Razorpay shared a single apartment as the co-founders rushed to meet with over 100 bankers to convince banks to work with them. The conversations were slow and remained in a deadlock for so long that the co-founders felt helpless explaining the same challenge to investors numerous times, they recalled in an interview last year.
To say things have changed for Razorpay would be an understatement. It’s become the largest payments provider for business in India, said Mathur. Razorpay, which competes with Prosus Ventures’ PayU, accepts a wide-range of payment options, including credit cards, debit cards, mobile wallets and UPI.
“Razorpay has established itself as a clear leader, with its strong focus on customer experience and product innovation,” said Choo Yong Cheen, chief investment officer for Private Equity at GIC, in a statement. “GIC has a long track record of partnering with leading fintech companies globally and is delighted to partner with Razorpay in its journey to transform payments and banking.”
India’s Razorpay launches corporate credit cards, current accounts support in major neo banking push
Some of Razorpay’s clients include budget lodging decacorn Oyo, fintech firm Cred, social giant Facebook, e-commerce Flipkart, top food delivery startups Zomato and Swiggy, online learning platform Byju’s, supply chain platform Zilingo, travel ticketing firms Yatra and Goibibo, and telecom giant Airtel .
The startup expects to process about $25 billion in transactions — up five times from last year — for nearly 10 million of its customers this year, said Mathur.
He attributed some of the growth to the coronavirus pandemic, which he said has accelerated the digital adoption among many businesses.
On the neo-banking and capital side, Mathur said, Razorpay expects RazorpayX and Razorpay Capital to account for about 35% of the startup’s revenue by the end of March next year.
Mathur said the startup’s payment processing service continues to be its fastest-growing business and does not need much capital to grow, so the startup will be deploying the fresh funds to expand its neo-banking offerings to include vendor payment, and expense and tax management and other features.
The startup, which aims to work with more than 50 million businesses by 2025, may also acquire a few firms as it explores opportunities around inorganic expansion in the neo-banking category, said Mathur.
“We will continue to make an impactful contribution to the growth of the industry, aid adoption in the under-served markets and drive new practices and a new thinking for the industry to follow. And this investment fits perfectly with our growth strategy,” he said.
While the coronavirus pandemic has slowed down deal-makings in India, about half a dozen startups in the country, including online learning platform Unacademy, and Pine Labs, have secured the unicorn status.
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Amazon inks cloud deal with Airtel in India
Amazon has found a new partner to expand the reach of its cloud services business — AWS — in India, the world’s second largest internet market.
On Wednesday, the e-commerce giant announced it has partnered with Bharti Airtel, the third-largest telecom operator in India with more than 300 million subscribers, to sell a wide-range of AWS offerings under Airtel Cloud brand to small, medium, and large-sized businesses in the country.
The deal could help AWS, which leads the cloud market in India, further expand its dominance in the country. The move follows a similar deal Reliance Jio — India’s largest telecom operator and which has raised more than $20 billion in recent months from Google, Facebook and a roster of other high-profile investors — struck with Microsoft last year to sell cloud services to small businesses. The two announced a 10-year partnership to “serve millions of customers.”
Airtel, which serves over 2,500 large enterprises and more than a million emerging businesses, itself signed a similar cloud deal with Google in January this year. That partnership is still in place, Airtel said.
“AWS brings over 175 services to the table. We pretty much support any workload on the cloud. We have the largest and the most vibrant community of customers,” said Puneet Chandok, President of AWS in India and South Asia, on a call with reporters Wednesday noon.
The two companies, which signed a similar agreement in 2015, will also collaborate on building new services and help existing customers migrate to Airtel Cloud, they said.
Today’s deal illustrates Airtel’s push to build businesses beyond its telecom venture, said Harmeen Mehta, Global CIO and Head of Cloud and Security Business at Airtel, on the call. Last month, Airtel partnered with Verizon — TechCrunch’s parent company — to sell BlueJeans video conferencing service to business customers in India.
Deals with carriers were very common a decade ago in India as tech giants rushed to amass users in the country. Replicating a similar strategy now illustrates the phase of the cloud adoption in the nation.
Nearly half a billion people in India came online last decade. And slowly, small businesses and merchants are also beginning to use digital tools, storage services, and accept online payments.
India has emerged as one of the emerging leading grounds for cloud services. The public cloud services market of the country is estimated to reach $7.1 billion by 2024, according to research firm IDC.
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Verizon partners with Airtel to launch BlueJeans in India
Bharti Airtel announced on Tuesday it has partnered with Verizon* to launch BlueJeans video-conferencing service in India to serve business customers in the world’s second largest internet market.
The video conferencing service, branded as Airtel BlueJeans in India, offers “enterprise-grade security” (which includes encrypted calls, ability to lock and password protect a meeting and generate randomized meeting IDs), a cloud point presence in India to enable low latency, HD video and Dolby Voice, and can accommodate up to 50,000 participants on a call.
Gopal Vittal, chief executive of Airtel, said in a call with reporters Tuesday that the Indian telecom operator is exploring ways to bring Airtel BlueJeans to home customers as well, though he cautioned that any such offering would take at least a few weeks to hammer out.
Airtel BlueJeans is being offered to businesses at no charge for the first three months, after which the video conferencing service will be offered at a “very competitive” price, said Vittal. Airtel will offer customized pricing plans for large businesses and small businesses, he added.
Airtel, the third largest telecom operator in India with 300 million subscribers, already maintains a partnership with G Suite and Cisco Webex, and Zoom. However, Vittal said that its collaboration with Verizon was “special” and enabled it to host data in India itself.
Verizon acquired BlueJeans in April this year. At the time, BlueJeans had over 15,000 business customers. Hans Vestberg, chief executive of Verizon, said on Tuesday that the American telecom giant was hopeful that Airtel BlueJeans would make major inroads in the Indian market, though he declined to share any figures.
Vestberg said Verizon is open to extending this partnership with Airtel to serve the Indian telecom operator’s business in African market, though both are currently focused on serving clients in India.
Tuesday’s announcement comes as video conferencing services have gained impressive momentum in India in recent months. Zoom app, which is also available to consumers, has already amassed over 35 million monthly active users in the country, according to mobile insights firm App Annie — data of which an industry executive shared with TechCrunch.
Reliance Jio Platforms, the top telecom operator in India with nearly 400 million subscribers, launched its video conferencing service JioMeet earlier this month. JioMeet is currently available to both consumers and business customers at no charge and a session on the service can last for up to 24 hours.
“We know we are not the first to launch a video conferencing in India, but we are confident that our differentiated offerings and brand value would stand out,” said Vittal.
Airtel BlueJeans, which includes BlueJeans’ Meetings, Events, Rooms, and Gateway for Microsoft Teams functionalities, will go live in India Tuesday evening.
*Verizon is TechCrunch’s parent company.
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Streaming service Hooq shuts down, ends partnerships with Disney’s Hotstar, Grab and others
Hooq, a five-year-old on-demand video streaming service that aimed to become “Netflix for Southeast Asia,” has shut down weeks after filing for liquidation and terminated its partnerships with Disney’s Hotstar, ride-hailing giant Grab, and Indonesia’s VideoMax.
Hooq Digital, a joint venture among Singapore telecom group Singtel (majority owner), Sony Pictures, and Warner Bros Entertainment, discontinued the service on Thursday. It had amassed over 80 million subscribers in nearly half of the dozen markets in Asia.
“For the past 5 years, we gave you unbelievable thrills, heartrending drama, roaring laughs, awesome action, and more. Our goal was to bring you the best entertainment from here to Hollywood. Our hearts are full of gratitude for all of you who shared the journey with us,” it says on its website.
Hooq publicly disclosed that it had raised about $95 million, but the sum was likely higher. News outlet The Ken analyzed the regulatory filings last month to report that Hooq had raised $127.2 million, and its losses in the financial year 2019 had ballooned to $220, suggesting that it had received more capital.
The streaming service said last month that it could not receive new funds from new or existing investors.
Homepage of Hooq
The service counted India, where it entered into a partnership with Disney’s Hotstar in 2018 and telecom operators Airtel and Vodafone, as its biggest market. The company also maintained a partnership with ride-hailing giant Grab to supply content in its cab, and VideoMAX in Indonesia.
Hooq brought dozens of D.C. universe titles including “Arrow,” “The Flash,” “Wonder Woman” and other popular TV series such as “The Big Bang Theory” to its partners. In India, users began noticing last week that those titles were disappearing from Hotstar.
A spokesperson of Hooq told TechCrunch today that its tie-ups with all its partners including Hotstar have closed. A Hotstar spokesperson did not respond to a request for comment.
Mobile operator Singtel first unveiled Hooq’s liquidation in an exchange filing last month. The Ken reported that the filing left hundreds of employees at Hooq stunned who thought the firm was doing fine financially. Nearly every employee at Hooq has been let go, with select few offered a job at Singtel, according to The Ken.
In an interview with Slator earlier this year, Yvan Hennecart, Head of Localization at HOOQ, said that the company was working to expand its catalog with local content and add 100 original titles in 2020.
“Our focus is mostly on localization of entertainment content; whether it is subtitling or dubbing, we are constantly looking to bring more content to our viewers faster. My role also expands to localization of our platform and any type of collateral information that helps create a unique experience for our users,” he told the outlet.
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India’s Reliance Jio rolls out Wi-Fi calling feature
Two of the top three telecom operators in India are beginning to address one of the biggest challenges hundreds of millions of their subscribers face in the country each day: poor call quality and abrupt voice drops.
Reliance Jio, India’s second largest telecom operator, announced today that it now supports voice and video calling functionality over Wi-Fi networks. The 4G-only network said it has started to roll out the feature to all of its subscribers in India and expects to reach all of its 360 million consumers by next week.
The rollout of calls over Wi-Fi functionality on Jio comes weeks after Airtel, India’s third largest telecom operator with more than 260 million subscribers, began to support this feature in select places in the country. Neither of the operators are levying any additional fee for this feature and say that their subscribers can place phone calls over Wi-Fi across the networks.
Wi-Fi calling is a popular feature that enables users to latch onto their wireless internet connection to make phone calls. These calls tend to be of much better quality than those that rely on traditional telecom infrastructure. In the U.S., T-Mobile, Verizon (which owns TechCrunch) and AT&T began to offer this feature in late 2015 and early 2016.
In many markets such as India, calls over internet began to gain traction four to five years ago after services such as WhatsApp enabled such functionality. In the years since, telecom operators have also rolled out support for calls over LTE networks.
Airtel currently supports Wi-Fi calling in select circles — such as Mumbai, Kolkata, Andhra Pradesh, Karnataka and Tamil Nadu — and requires its users to be a subscriber of Airtel broadband service. It also works only on a handful of smartphone models.
Reliance Jio, on the other hand, supports more than 150 smartphone models, including several recent iPhone generations and a wide range of mid-tier and high-end Android smartphones. A Reliance Jio spokesperson told TechCrunch that Jio’s Wi-Fi calling functionality works on any Wi-Fi network.
Akash Ambani, director of Jio, said Reliance Jio consumers already use more than 900 minutes of voice calling every month. “The launch of Jio Wi-Fi Calling will further enhance every Jio consumer’s voice-calling experience, which is already a benchmark for the industry with India’s-first all VoLTE network,” he said in a statement.
Vodafone, which at the last count (PDF) was ahead of Reliance Jio by a few million subscribers, is yet to offer this functionality. The announcement follows price hikes by all the top three telecom networks in India.
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Lessons from M-Pesa for Africa’s new VC-rich fintech startups
In African fintech, the fourth quarter of 2019 brought big money to new entrants.
Chinese investors put $220 million into OPay and PalmPay — two fledgling startups with plans to scale in Nigeria and the broader continent. Several sources told me the big bucks had created anxiety for more than few payments ventures in Nigeria with similar strategies and smaller coffers. They may not need to fret just yet, however: lessons from Africa’s most successful mobile-money case study, M-Pesa, suggest that VC alone won’t buy scale in digital finance.
Startups and fintech in Africa
Over the last decade, Africa has been in the midst of a startup boom accompanied by big growth in VC and improvements in internet and mobile penetration.
Some definitive country centers for company formation, tech hubs and investment have emerged; Nigeria, South Africa and Kenya lead the continent in numbers for all those categories. Additional strong and emerging points for innovation and startups across Africa’s 54 countries and 1.2 billion people include Ghana, Tanzania, Ethiopia, and Senegal.
The continent surpassed $1 billion in VC to startups in 2018 and per research done by Partech and WeeTracker, fintech is the focus of the bulk of capital and deal-flow.
By several estimates, Africa is home to the largest share of the world’s unbanked and underbanked population.
This runs parallel to the region’s off-the-grid SME’s and economic activity — on display and in commercial motion through the street traders, roadside kiosks and open-air markets common from Nairobi to Lagos.
IMF estimates have pegged Africa’s informal economy as one of the largest in the world. Thousands of fintech startups have descended onto this large pool of unbanked and underbranked citizens and SMEs looking to grow digital finance products and market share.
In this race, the West African nation of Nigeria — home to Africa’s largest economy and population — is becoming an epicenter for VC. Many fintech-related companies are adopting a strategy of scaling there first before expanding outward.
Enter PalmPay and OPay
That includes new entrants OPay and PalmPay, which raised so much capital in fourth quarter 2019. It’s notable that both were founded in 2019 and largely incubated by Chinese actors.
PalmPay, a consumer-oriented payments product, went live in November with a $40 million seed-round (one of the largest in Africa in 2019) led by Africa’s biggest mobile-phones seller — China’s Transsion. The startup was upfront about its ambitions, stating its goals to become “Africa’s largest financial services platform,” in a company statement.
To that end, PalmPay conveniently entered a strategic partnership with its lead investor. The startup’s payment app will come pre-installed on Transsion’s mobile device brands, such as Tecno, in Africa — for an estimated reach of 20 million phones in 2020.
PalmPay also launched in Ghana in November and its U.K. and Africa-based CEO, Greg Reeve, confirmed plans to expand to additional African countries in 2020.
If PalmPay’s $40 million seed round got founders’ attention, OPay’s $120 million Series B created shock-waves, coming just months after the mobile-based fintech venture raised $50 million — making OPay’s $170 million capital haul equivalent to roughly a fifth of all VC raised in Africa in 2018.
Founded by Chinese owned consumer internet company Opera — and backed by 9 Chinese investors — OPay is the payment utility for a suite of Opera -developed internet based commercial products in Nigeria that include ride-hail apps ORide and OCar and food delivery service OFood.
With its latest Series A, OPay announced it would expand in Kenya, South Africa, and Ghana.
In Nigeria, OPay’s $170 million Series A and B announced in the span of months dwarfs just about anything raised by new and existing fintech players, with the exception of Interswitch.
The homegrown payments processing company — which pioneered much of Nigeria’s digital finance infrastructure — reached unicorn status in November when Visa took a reported $200 million minority stake in the venture.
A sampling of more common funding amounts for payments ventures in Nigeria includes established fintech company Paga’s $10 million Series B. Recent market entrant Chipper Cash’s May 2019 seed-round was $2.4 million.
There is a large disparity between fintech startups in Nigeria with capital raises in ones and tens of millions vs. OPay and PalmPay’s $40 and $120 million rounds. Conventional wisdom could be that the big-capital, big spending firms have an unmistakable advantage in scaling digital payments in Nigeria and other markets.
A look at Kenya’s M-Pesa may prove otherwise.
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India to spend $6 billion to revive telecom operators BSNL and MTNL
India said on Wednesday it plans to spend nearly $6 billion to revive loss-making state-funded telecom operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).
In a press conference, telecom minister Ravi Shankar Prasad said today the Narendra Modi government has given its in-principle approval to the merger of BSNL and MTNL and infuse billions of dollars in capital, though he did not specify a time frame.
BSNL offers telecom services across the nation, while MTNL serves people in New Delhi and Mumbai. Both the firms have been bleeding money for years as competition from private players intensified in recent years after the arrival of India’s richest man Mukesh Ambani’s aggressive firm Reliance Jio. BSNL and MTNL have debt of about $5.65 billion.
The arrival of Reliance Jio, which undercut the market with its 4G-only telecom network, free voice calls and incredibly low-cost data prices, saw incumbents Vodafone and Airtel lower their prices and expand their 4G networks across the country.
MTNL, which is a listed company, will become a subsidiary of BSNL until the merger is completed, Prasad told journalists. “Neither BSNL nor MTNL are being closed, nor are they being disinvested or being hived off to third party,” he said, refuting weeks-long speculation that the government wanted to shut the carriers that serve about 120 million subscribers.
The revival plan includes a capital infusion of $2.8 billion to enable BSNL to purchase 4G spectrum, and write off of $520 million worth of taxes these purchases would incur. The network operators will additionally raise about $2.1 billion of long-term bonds that the New Delhi government will back and monetize $5.3 billion worth of assets over the next four years, the minister said.
“We want to make BSNL and MTNL competitive, and bring in professionalism,” Shankar said. The government is hopeful that BSNL would become operationally profitable in the next two years, he said.
The existence of BSNL, which alone serves more than 116 million subscribers, is in the strategic interest of the nation, Prasad said in a conference last week. “Whenever we have flood or cyclone, BSNL is the first one to offer services for free,” he said.
BSNL, which uses about 75% of its revenue to pay its roughly 176,000 employees, was unable to process their salaries last month. The government said today that it will soon address this and also offer various “attractive voluntary retirement packages” to employees aged 50 or more. In a press release, the government said it would spend about $2.4 billion on the employee retirement packages.
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India’s top mobile operator Airtel is buying smaller rival Telenor India
Less than a month after Vodafone confirmed it is in talks to merge with Idea Cellular and create India’s largest mobile operator, one piece of M&A has been confirmed in that space. Bharti Airtel has gobbled up smaller player Telenor India in a deal announced today. The Airtel-Telenor deal is subject to regulatory approvals, but both sides said it should be completed within the next… Read More
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