Vodafone Idea Limited (VIL), and Bharat Sanchar Nigam Limited (BSNL) are two major, but struggling telecom operators in India. They are trying to grow their business by scaling infrastructure, but it is not affordable at all. To build out and end-to-end telecom infrastructure which includes fiber backhaul, towers, and spectrum usage.
A few days back, there was a report claiming that Vodafone Idea and BSNL are exploring an infrastructure sharing deal. That would mean less duplicate spending and a faster rollout, given that the operators have limited cash.
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Vodafone Idea has been trying to raise money via debt to improve coverage and modernise infrastructure. This would allow Vodafone Idea to add new users. BSNL is also trying to roll out a fresh 4G infrastructure across India, and it has already started with over 1 lakh 4G sites.
If the telcos come on the same page about sharing infrastructure, that would mean massive cost savings for them. Along with that, it would give them an edge in the market, and allow for a faster network rollout across the country. The telcos want to now expand the coverage in rural areas along with the urban towns. But the ROI (return on investment) for pouring money to build out the rural telecom infrastructure is not attractive at all for the telcos.
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However, by sharing the infrastructure, both Vodafone Idea and BSNL will be able to reduce the cost for them in rolling out infra in the rural areas, and thus, that would improve their ROI massively. However, we need to wait for the regulatory approvals, along with the company agreements over the quality of services (QoS).
The regulatory hurdles are one of the major components here and that is something we will have to wait and watch out for.
