Cisco Systems is in advanced talks to buy the Airtel-Vodafone Idea's WiFi joint venture Idea (JV) for an enterprise value of Rs 200 crore, according to sources familiar with the matter.
A team of executives from the US technology and networking company was in India last week to finalize deal negotiations.
Airtel-Vodafone Idea JV was created in 2014 and named FireFly Networks. However, industry insiders say the collaboration failed to get off the ground because neither partner committed to investing to the company.
Cisco is likely to retain current management of FireFly Networks, which is led by CEO Raj Sethia, a former Vodafone executive, according to sources cited earlier.
"Cisco does not comment on rumours," the San Jose, California-based company said in response to B2B’s queries.
Vodafone Idea and Sethia declined to comment. Airtel has not responded to inquiries.
FireFly management has been looking for investors for the last 2-3 years as Airtel and Vodafone have not been keen on infusing new money due to little focus on public WiFi infrastructure, according to sources.
Vodafone Idea CEO Ravinder Takkar indicated last month that the telecoms company could exit the joint venture, revealing that the company itself and Airtel are not paying much attention to the venture.
FireFly focuses on the B2B market and counts the Airports Authority of India, Supreme Court of India, GMR, Fortis and DLF Cyber among its partners.
The company, which also counts Cisco and Indus Towers among its partners, has a WiFi infrastructure distributed across 650 venues with 10,000 access points in 40 cities in 25 states. It claims to serve 2.5 million daily users, including 600,000 users at 29 airports in the country.
"Public WiFi is not price competitive in India and is not a priority for telcos. While public WiFi is important and in demand in India, its feasibility study has always been poor. One hopes that Cisco can improve the business case", Mahesh Uppal, a telecom analyst and Director of Com First (India), told B2B.
FireFly Networks, which competes with US-based Boingo Wireless, also has contracts with its parent companies Airtel and Vodafone Idea where it deploys WiFi infrastructure for data offloading in areas where demand is high but cell tower capacity it is low along with indoor public spaces.
When FireFly was set up, its sponsors were intended to fill the gap in wireless network capacity due to the unavailability of 3G spectrum. However, the nationwide launch of affordable 4G Reliance Jio services a year later reduced the need to offload data as operators invested heavily in expanding 4G wireless coverage, which addressed capacity requirements.
Ashwinder Sethi, principle at Analysys Mason, told that the acquisition of FireFly Networks could provide synergy for Cisco as it looks to tap private network business opportunities in India. Private networks are deployed globally through a mix of LTE/5G networks, as well as through WiFi/FTTx. "So FireFly's WiFi capabilities could allow Cisco faster time to market on the private network side," Sethi said.
Also Read: Tejas Networks buys 62.65% stake in Saankhya Labs for Rs 276.24 crore