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Airtel to grab meaningful slice of cybersecurity market

Bharti Airtel’s multiple new enterprise projects will help it grow its overall B2B business and it could take a meaningful share in the country’s cybersecurity market by 2025 with the help of its new offerings and investments, Ambit Capital research said in its latest report. Collaborative communication, cybersecurity, cloud and data center services can drive Airtel Business EBITDA by 25% during FY20-23.

“Unlike Jio, which is considered much beyond a telco due to its linkage to large TAM projects like JioMart, investors think of Airtel as ‘just a telco’. This is evidenced by its valuations of 7.5x FY22E EV/EBITDA, akin to global telcos. Influenced by global telcos’ constant struggle to achieve revenue growth outpacing nominal GDP, investors are reticent to look beyond the market reset for Airtel. We differ,” analysts at Ambit Capital said.

Unlike Jio, which benefits from JioMart, a big hairy audacious goal, Airtel’s non-telecom initiatives aren’t individually large. But success with data centre dominance by NXTRA is setting the ground for Airtel to chart a path for steady increase in addressable market.

“We think that these initiatives can drive ~25% FY20-23E Airtel Business EBITDA CAGR, akin to wireless profitability growth trajectory (bouyed by market reset). As Airtel demonstrates non-connectivity monetisation success and provides more colour on its efforts and likely growth roadmap, investors will take cognizance and value it differently than a telco. Our target valuation of 9.4x FY22E EV/EBITDA factors in this upside,” Ambit Capital said.

Analysts said that Airtel could take 5% of the domestic cybersecurity market, by 2025E implying $65mn incremental revenue. “This may appear small vs. Airtel’s FY20 B2B revenue of $1.8bn. But we note that this is just one service,” it added.

Airtel has stitched together a cybersecurity bundle ‘Airtel Secure’ targeting the domestic market which will reach $13 billion by 2025. It is looking to layer on top of its connectivity relationships with large enterprises and assets like data centres, security as a service. The telco has now stitched together partnerships with multiple vendors, each of whom has a specialised focus.The Sunil Mittal-led telco recently launched its security intelligence center with an investment of Rs 100 crore and entered into partnerships with Cisco, Vmware, Radware and Force point to expand advanced cyber security solutions for business customers.

Airtel also signed a multi-year, Strategic Collaboration Agreement (SCA) with Amazon Web Services (AWS) to offer a comprehensive set of innovative cloud solutions to large enterprise and small and medium enterprise (SME) customers in India.

It is aiming to tap the $1billion cloud communications market with the launch of Airtel IQ for enterprises and small medium enterprises in the country. Airtel is the first telecom operator to enter this segment and expects that its entry will grow the market at over 20% year-on-year. Koliasa

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