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The digital infrastructure provider is also looking to play a role in 5G private network segment
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CloudExtel is also exploring inorganic growth as it looks to scale
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It continues to face RoW challenges even as the Government came up with RoW policy to address the issues
On the back of India’s booming digital economy, CloudExtel, a digital infrastructure provider, is targeting a growth of around 50% as it plans to invest heavily in boosting fiber and small cells network.
CloudExtel offers several digital infrastructure services, such as small cell hosting, FTTH, intra-city fibre and virtualised networks to Communications Service Providers (CSPs), Internet Service Providers (ISPs), data centres and enterprises.
The company was recently in the news for acquiring debt funding of INR 2000 million ($23.96 mn) from Macquarie Capital and Advancap. Last year Macquarie Capital acquired a controlling stake in CloudExtel for around $100 million.
Now, the company plans to use the funds to boost the small cells and fiber network in the country.
“The roadmap going forward is to continue to accelerate capital deployment. And it's going to be equally divided between site build out in the small cell space and towards fiber deployment,” said Kunal Bajaj, CEO and Co-Founder of CloudExtel.
On average, Indians consumed 24GB of data per month in 2023 and this is only going to increase as 5G data traffic continues to rise.
Several government initiatives, like Digital India, coupled with the economical 4G tariff, have led to a flourishing digital economy in the country. The popularity of e-commerce and digital public infrastructure (DPI) initiatives like Aadhaar and unified payment interface (UPI) have also led to a boom in the digital economy. This is pushing the service providers to aggressively expand the digital infrastructure. Digital infrastructure providers, like CloudExtel, are looking to capitalize on this growth.
Based on capital infusion and an aggressive deployment plan, CloudExtel is targeting a growth of at least 50% in revenue this year. “Over the last five years, we have been recording a growth of 55% to 60% CAGR in revenues year-on-year. This year is going to be no different,” Bajaj said.
Boosting small cells and fiber infrastructure
As of now, CloudExtel is present in 6,000 locations which have around 15,000 to 16,000 small cells.
“We believe the market will require over 250,000 small cells for each of the three telcos [Reliance Jio, Bharti Airtel and Vodafone Idea]. Considering that we were the first to provide small cells in the country, we will continue to invest quite heavily to build out. We certainly see ourselves to be one of the major players as continuous growth happens,” Bajaj told Fierce Network.
A key reason for this anticipated growth in small cells in India is that 5G traffic is likely to grow. “The densification of capacity has been in 4G space so far. It is only now that we are starting to see that 5G macro sites are also starting to hit the capacity limits,” he added.
India’s top two telcos, Reliance Jio and Bharti Airtel, have launched 5G services but are offering 5G at a 4G tariff which has led to muted monetization. Together, the two telcos have around 172 million 5G subscribers.
On the fiber front, CloudExtel has deployed around 7,000 km of fiber and will invest to boost its fiber network in the country. It also claims to pioneer the deployment of India’s first neutral shared radio access network (RAN) infrastructure. The company deployed shared RAN at nine railway stations in Mumbai city recently.
CloudExtel to play a role in 5G private network
CloudExtel also sees itself playing a role in the 5G private network market.
“One of the main advantages that we bring into the domain is that we would be able to partner and work very closely with systems integrators who are building applications for enterprises that would require an underlying 5G layer. We do intend to want to be part of private network space, working with both the telcos as well as working with the SIs [System Integrators] to deliver that end-to-end solution,” Bajaj said.
The company launched about 10 years ago as a unit of Bombay Gas Company. Initially, it used the existing gas pipes to lay a fiber network in Mumbai (earlier Bombay), India’s financial capital, before launching other active and passive infrastructure.
CloudExtel is looking for opportunities for inorganic growth as well. “We are definitely looking at the right opportunities where there are partners who are looking to develop and scale. We have had several informal conversations with people in the ecosystem, but nothing firm right now,” Bajaj said.
The right and wrong of right of way
Traditionally, India has had massive right of way (RoW) issues, with different states and sometimes even districts charging different and massive rates for RoW.
In addition, approvals from several authorities are required, leading to delays. This is one of the key reasons for the country's low fiber network. The Department of Telecommunications (DoT) came up with a RoW policy some time back. However, Bajaj said that the issues continue to persist.
“We are still continuing to face challenges with particular states and particular cities where the, uh, philosophy of the central government policy has not filtered down all the way to where the actual decisions are being made on the ground,” said Bajaj. He also highlights the growing demand for overhead fiber because of the challenges associated with RoW in India.