Kerala in talks with Airtel, Jio to monetise internet firm's assets

Kfon, after three years, may have to raise Rs 250 crore annually to repay its debt and for maintenance and expansion

Kerala will monetise its state-owned internet firm’s assets. It is in talks with private companies Bharti Airtel and Reliance Jio as it seeks funds to bring digital services to the poor.

Kerala Fibre Optic Network (Kfon) is expanding its footprint to around 30,000 offices and has provided free internet to two million economically backward households. After three years, it may have to raise Rs 250 crore annually by monetising assets to repay debt and for maintenance and expansion. Airtel and Jio did not respond to questions from Business Standard about taking part in Kfon’s monetisation of dark fibre (unused fibre).

Santhosh Babu, Kfon’s managing director, said Airtel has written his company a letter expressing interest in some of its areas. 

“We are awaiting a government order regarding asset monetisation. It is likely to come very soon. Moreover, we will have to go for price discovery or per kilometre cost. We are in talks with several players including Jio and Airtel,” he said.

Kfon has laid fibre cable for about 30,000 km, while Jio has about 10,000 km. Kfon aims to lease out around 50 per cent of the fibre to telecom service providers and cable networks. The major sources of revenue through asset monetisation are expected to be dark fibre, leased lines, and network centres.

Kfon is a special purpose vehicle between Kerala State Electricity Board (KSEB) and Kerala State IT Infrastructure Ltd (KSITIL). KSITIL is soon expected to get charge of setting up 5G infrastructure in parts of the state. Babu said that within the next three years Kfon will have to pay annually around Rs 100 crore as payment for Rs 1,100 crore raised from Kerala Infrastructure Investment Fund Board.

“In addition, our operations and maintenance will require Rs 4-5 crore a month, electricity bills will be around Rs 15 crore a year and we will have to pay certain charges to the government of India too. We may require around Rs 250 crore in total per year and will have to meet a good share of this through asset monetisation,” he said. 

The total investment for the project is expected to be in the range of Rs 1,600 crore. According to Kfon, around 85 per cent of its infrastructure work is complete.

Of the 30,000 Kfon offices planned, infrastructure is installed in 24,357 and in 8,300 of them have started services. Around 14,000 families in 140 assembly constituencies are yet to be selected by the local self-government for Kfon services.