Airtel is buying 25% of a SD-WAN start-up. Materiality of the information is anybody’s guess.

The Company is buying 25% into Lavelle Networks Private Limited (LNPL).

Key points to note –

  • Investment amount is not disclosed.
  • LNPL’s scale and financials are not disclosed.

Reason for not disclosing – confidentiality.

Rationale for investment:

  • LNPL founded in 2015 is claimed to be a front runner in Software Defined Wide Area Networks (SD WAN).
  • As Companies are moving their systems and technology infrastructure on cloud, SD WANs would make them efficient, safe and effective.
  • LNPL therefore will help Airtel in rolling out this solution to latter’s claimed more than 1 million business customers.

Prima facie the investment look like a big thing. However, when looked closely it’s difficult to comment upon the materiality of this development for Airtel. Reasons –

  • SD WAN is offered by multiple entities of various shapes and sizes. Yes, having a readymade product in Airtel’s arsenal should ideally help, but then a customer may decide upon an alternative.
  • Not much is disclosed about the technical superiority of LNPL vis-a-vis competition. The only point mentioned is that LNPL’s “platform has connected several thousands of Indian enterprises from the nation’s largest financial institutions to e-commerce networks”. I have no capability to comment based on this statement.
  • It again bothers me why Airtel has neither provided any details on LNPL’s operational/ financial scale nor details of it’s own investment. When I looked little further, I found that LNPL has since inception raised a total of $ 4mn from 6 investors – no prominent name there.

Looking at it in entirety, I believe the news is getting much more attention than it possibly deserves.

Airtel has surely done a remarkable job over the last few years and now also has strong sectoral tailwinds. It’s natural under the circumstances to try play an active news provider in the market. Personally I am bullish on it’s overall prospects.

However, I really hope and wish that it starts getting selective but more detailed in it’s disclosures for people like us to be better informed.

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