Bharti Airtel Limited

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Page 1 of 5 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/08/1173 22nd October 2024 Notice under Section 6(2) of the Competition Act, 2002 given by Bharti Airtel Limited CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 13th August 2024, the Competition Commission of India (Commission) received a notice (Notice) under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) given by Bharti Airtel Limited (Bharti Airtel). The Notice was given pursuant to a board resolution dated 30th July 2024 of Bharti Airtel. 2. Bharti Airtel, vide communications dated 27th August 2024 and 20th September 2024 issued under Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), was required to remove defects from the Notice and furnish certain information relevant for the purpose of assessment of the combination. Combination Registration No. C-2024/08/1173 Page 2 of 5 Bharti Airtel made its submissions dated 13th September 2024, 8th October 2024, and 11th October 2024. 3. The Notice has been given in relation to the increase in the percentage shareholding of Bharti Airtel in Indus Towers Limited (Indus Towers) to 50.005% on account of the buyback of its shares by Indus Towers. Bharti Airtel held 48.95% of the share capital in Indus Towers. The board of directors of Indus Towers, on 30th July 2024, approved a buyback of up to 5,67,74,193 shares. As per the board resolution dated 30th July 2024 of Bharti Airtel, it did not participate or tender its shares held in Indus Towers in the Buyback. As a result, though Bharti Airtel’s shareholding in absolute terms remains the same, it increased in percentage terms. 4. Bharti Airtel is a communications solutions provider with over 550 million customers in 17 countries in South Asia and Africa. 5. Indus Towers is a passive telecom infrastructure provider. It deploys, owns, and manages passive telecom infrastructure for various mobile operators. It has a presence in all 22 telecom circles in India. 6. Bharti Airtel and Bharti Hexacom Limited (BHL), belonging to the group to which Bharti Airtel belongs, put together have a presence in all 22 telephony circles in India providing passive telecom infrastructure services. However, in the ordinary course of business, Bharti Airtel does not independently provide passive infrastructure services through telecom towers to third parties and only uses these services for captive consumption. The minimal external usage is not only infrequent and in circumstances outside the ordinary course of business, and also geographically scattered. The market share of Bharti Airtel and BHL (excluding captive use) for each of the provision of passive infrastructure services in India through towers (macro and micro put together), and macro towers is less than 1%. Bharti Airtel and BHL do not have market-facing micro towers/sites. Combination Registration No. C-2024/08/1173 Page 3 of 5 7. Firefly Networks Ltd. (Firefly), belonging to the group to which Bharti Airtel belongs, and Indus Towers through its affiliate are involved in providing passive infrastructure services through the provision of small cells, distributed antenna systems (DAS), and/or Wi-Fi infrastructure services. Firefly and/or Indus Towers do not have a significant presence in these segments. 8. Bharti Airtel’s wireless mobile telephony services exhibit a vertical interface with the passive telecom infrastructure service business of Indus Towers. It has been submitted that under the Infrastructure Provider Category-I (IP-I) Guidelines issued by the Department of Telecommunications (DoT), all IP-I registered companies, including Indus Towers, are required to provide access to their passive infrastructure to all Telecom Service Providers (TSPs) on a non-discriminatory basis. These guidelines are designed to ensure a level playing field in the telecommunications sector by preventing any unfair advantage or preferential treatment toward specific TSPs/customers, including shareholders of the IP-I companies. As a result, Indus Towers does not have, and indeed, cannot have, any preferential arrangement with its shareholders or any other customers regarding the provision of passive telecom infrastructure services. 9. It has been further submitted that Indus Towers or Bharti Airtel/BHL would also not have any incentive to engage in foreclosure practices related to tenancies. The incentive to add TSPs is inherent to the tower business and driven by its cost structure. The incremental cost of adding new TSPs to existing towers is low. Additionally, the incremental revenue gained from adding new TSPs is significant. This creates a strong incentive for passive infrastructure providers to offer co-location on existing towers to TSPs looking to expand their capacity or coverage. Further, the base rent charged by the tower company falls as the number of co-location(s) increases. The incentive for tower companies to add new co-location has increased due to: (i) the general trend towards consolidation in the segment of provision of wireless mobile telephony services in India, leading to a decrease in the number of TSPs (i.e., potential customers for tower companies), and (ii) the fact that the average number of co-locations offered Combination Registration No. C-2024/08/1173 Page 4 of 5 by tower companies is currently significantly below the maximum capacity. Providing these services exclusively only to Bharti Airtel would foreclose potential revenue that can be generated from other TSPs that constitute over 60% of the market. Indus Towers provides anchor tenancy to all TSPs and will continue to do so post the Combination. The growth in demand from TSPs arising from the need to win customers by increasing coverage and capacity has also resulted in an increased demand for new towers in (a) new locations to increase coverage, and (b) highly populated locations to increase capacity. Tower companies are incentivised to install new towers since typically, new towers are installed at the request of a TSP and a minimum rental is assured. Due to the competition among the TSPs, other TSPs would follow with requests at such new tower as other TSPs will have the same incentive to increase capacity or coverage as to meet competition from the first TSP, thus increasing the profitability of the new tower. 10. In the instant matter, the change that is taking place pursuant to the transaction notified to the Commission is an increase in shareholding of Bharti Airtel from 48.95% to 50.005%. Therefore, it would be relevant to examine the effect of such 1.05% increase in the shareholding of Bharti Airtel in Indus Towers. 11. From the submissions made by Bharti Airtel, it is observed that a majority of the anchor tenancies provided by Indus Towers are with Bharti Airtel. Conversely, a majority of the colocation tenancies provided by Indus Towers are with other TSPs. 12. Further, Indus Towers is a listed company. Prior to the Combination, Bharti Airtel held 48.95% shareholding and Vodafone group held 3.06% shareholding and the remaining shareholding was held by the public shareholders. Bharti Airtel was the single largest shareholder with a considerable shareholding. The other shareholders were distant in terms of percentage shareholding. The increase in the shareholding percentage of Bharti Airtel (1.055%) is not likely to cause a change in its ability to cause foreclosure concerns. Indus Towers and Bharti Airtel are not likely to have incentives to foreclose passive telecom infrastructure services through towers to other TSPs(s) as they contribute a larger majority of colocation provided by Indus Towers. Combination Registration No. C-2024/08/1173 Page 5 of 5 13. Considering the material on record, including the details provided in the notice and the assessment of the Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Combination is not likely to have appreciable adverse effect on competition in India. Therefore, the Commission approves the Combination under Section 31(1) of the Act. 14. This order may be revoked if, at any time, the information provided by the notifying party is found to be incorrect. 15. The information provided by the notifying party shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 16. The Secretary is directed to communicate this order to Bharti Airtel.