Airtel set to leave the islands with a loss
THE big backers of the Airtel-Vodafone joint venture – Indian telecoms giant Bharti Airtel and its British counterpart Vodafone – will end up making a loss from 15 years of operating in the Channel Islands, even if its proposed merger with Sure goes ahead.
The company, which launched in the CI market in 2007, has told Economic Development that it intends to pull out from what it described as a sub-optimal market, whether or not the Sure deal goes ahead.
Once the States committee became involved in the merger talks, Guernsey Airtel, the local company for the telco, presented figures to show that its investment in the islands had resulted in a net loss to the company. It added that it was seeking to exit the CI market due to financial and strategic reasons.
Economic Development said this would be better happening with binding conditions and commitments rather than a straightforward departure from the market.
Airtel-Vodafone CEO Sid Ahlawat has welcomed the proposal for the merger to be approved directly by the States, locking in competition elements for Sure to abide by as a result.
‘The proposed merger transaction involving Sure and Guernsey Airtel, if approved, will facilitate a consolidation to ensure the long-term sustainability of the telecom sector in the Bailiwick of Guernsey through enhanced and viable investments in mobile network infrastructure which will be beneficial for consumers, enterprises, employees and the telecoms infrastructure as a whole,’ he said.
Sure currently accounts for about 60% of the mobile market, with JT and GAL accounting for 20% each.
If the merger was to go ahead, Sure would account for 80% of the local market, and the Guernsey Competition Regulatory Authority had told the States that it would be unlikely to be able to approve the transition on competition grounds.
Sure CEO Alistair Beak said that the public benefits of the merger were at the forefront of the decision which would provide a broader service.
‘Guernsey is the most important factor in this,’ he said. ‘This deal will trigger a much larger £37m. investment into a broader network and better coverage, which we wouldn’t otherwise be able to do.
‘We have a number of legally-binding commitments which mean all Airtel-Vodafone customers will keep the prices that they pay, aside from inflation, for three years, and have the same choices that they have today.’
He said that Economic Development had carried out a thorough process for more than a year which included consultation with the regulator, independent economic analysts and stakeholders before agreeing to propose the temporary exemption of competition law.