Indian telecom giant Bharti Airtel is hiving off its data centres into a standalone business with plans to induct a partner into the freshly carved out unit, said multiple people briefed on the matter.
The Bharti Airtel board has approved the process of making data centres, currently a part of its enterprise services, an independent 100% subsidiary. India's largest telco by subscriber base and revenue share will appoint a new CEO to scale up its data centre operations, currently present in 7-8 cities, sources said.
When contacted by TOI, a Bharti spokesperson said, "As a company policy we do not comment on market speculation."
Bharti's move comes at a time when global telecom conglomerates like NTT Communications and SingTel have chased deals to acquire data centre firms to tap the rising demand for information and communication technology (ICT) business. Last year, NTT acquired 74% stake in NetMagic, a cloud-based data centre and hosting firm based in Bangalore.
A typical data centre, either physical or virtual, offers storage, management and dissemination of data and information for businesses. India's still nascent data centre market could reach $1.3 billion, with 6.6 million sqft space, by 2016, said a recent Gartner report. It said banks, government and new emerging businesses increasingly outsourced data centres while focusing on their core functions.
Rising energy costs have worried Indian data centre managers as the business model rides heavily on power, cooling and space.
Bharti's data centres provided captive services to its in-house telecom play but will now focus on getting other businesses on board. "They will look to cater to small and medium type enterprises along with targeting sectors such as retail and e-commerce which need storage and backup facilities as well as cloud services," said a person familiar with Bharti's plans.
Interestingly, Bharti's data centre plans come at a time when its 10-year old IT outsourcing contract with technology biggie IBM is up for renewal by 2014.
Sources mentioned earlier said Bharti would build scale in data centre operations before monetizing it. "Frankly anything less than a billion-dollar valuation for the unit does not make much sense," said a banking source who advises Bharti on deals. Bharti could initially look at a partner to grow the business and monetization plans would follow, he said.
Both strategic and financial investors have warmed up to data centres providing data cloud services and networks to clients conducting businesses globally.
Bharti, which is saddled with more than $11 billion debt, has explored ways to monetize its mature businesses. The telco recently sold 5% stake to Qatar Foundation to raise $1.2 billion and has short-listed two PE investors to sell about 35% stake in its DTH unit, Airtel Digital. Last year, it took the tower business public raising $800 million in the process amid 13 consecutive quarters of falling profits.
Bharti hives off data centres, may sell stake - The Times of India
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The Bharti Airtel board has approved the process of making data centres, currently a part of its enterprise services, an independent 100% subsidiary. India's largest telco by subscriber base and revenue share will appoint a new CEO to scale up its data centre operations, currently present in 7-8 cities, sources said.
When contacted by TOI, a Bharti spokesperson said, "As a company policy we do not comment on market speculation."
Bharti's move comes at a time when global telecom conglomerates like NTT Communications and SingTel have chased deals to acquire data centre firms to tap the rising demand for information and communication technology (ICT) business. Last year, NTT acquired 74% stake in NetMagic, a cloud-based data centre and hosting firm based in Bangalore.
A typical data centre, either physical or virtual, offers storage, management and dissemination of data and information for businesses. India's still nascent data centre market could reach $1.3 billion, with 6.6 million sqft space, by 2016, said a recent Gartner report. It said banks, government and new emerging businesses increasingly outsourced data centres while focusing on their core functions.
Rising energy costs have worried Indian data centre managers as the business model rides heavily on power, cooling and space.
Bharti's data centres provided captive services to its in-house telecom play but will now focus on getting other businesses on board. "They will look to cater to small and medium type enterprises along with targeting sectors such as retail and e-commerce which need storage and backup facilities as well as cloud services," said a person familiar with Bharti's plans.
Interestingly, Bharti's data centre plans come at a time when its 10-year old IT outsourcing contract with technology biggie IBM is up for renewal by 2014.
Sources mentioned earlier said Bharti would build scale in data centre operations before monetizing it. "Frankly anything less than a billion-dollar valuation for the unit does not make much sense," said a banking source who advises Bharti on deals. Bharti could initially look at a partner to grow the business and monetization plans would follow, he said.
Both strategic and financial investors have warmed up to data centres providing data cloud services and networks to clients conducting businesses globally.
Bharti, which is saddled with more than $11 billion debt, has explored ways to monetize its mature businesses. The telco recently sold 5% stake to Qatar Foundation to raise $1.2 billion and has short-listed two PE investors to sell about 35% stake in its DTH unit, Airtel Digital. Last year, it took the tower business public raising $800 million in the process amid 13 consecutive quarters of falling profits.
Bharti hives off data centres, may sell stake - The Times of India
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