New Delhi: The big bucks continued to flow in the GSM network business as Idea Cellular Ltd gave its remaining six circles in the north and south of the country to Nokia Siemens Networks (NSN) to expand over the next two years at a cost of around $500 million (Rs2,050 crore). The value of the contract is higher than the $300 million-plus deal it had struck with NSN’s chief rival Ericsson three months ago for expanding five out its 11 circles for the next three years.
Besides the state-owned networks, Idea is the only major GSM operator still awarding bulk contracts for expansion. The company hinted it, too, may soon follow its private sector competitors such as Bharti Airtel Ltd and Hutchison Essar Ltd and outsource its entire network management to the vendors.
“We are actively investigating the possibility,” said Rajat Mukarji, vice-president for corporate affairs.
Analysts point out that the time may be ripe for Idea, one of the last entrants in the cellular market and still covering only about half the area compared to the biggest network Bharti Airtel, to look for outsourcing its network operations as well. The company had, in March, signed an estimated $700 million deal with the world’s largest IT services provider IBM Corp to manage its non-network elements such as billing, number activation, fraud detection.
“With this deal, Idea Cellular has more or less seen off the problem of managing its expansion in all its 11 circles,” said Sourabh Kaushal, industry manager for technology-related sectors at consultant Frost and Sullivan in Mumbai. “And the pattern in which the company has awarded its expansion contracts may also give an indication of the pattern in which it is likely to award its network management contracts.”
Network management contracts have been pioneered by Indian mobile operators in their attempt to focus on planning and expanding their services to an exploding market and are usually worth hundreds of millions of dollars.
Under the current expansion deal, NSN will expand Idea’s data-enabled GSM network in Delhi, Haryana, Uttaranchal, Uttar Pradesh, Andhra Pradesh and Kerala. “This will allow us to more than double our existing capacity in these circles,” Mukarji added.