New Delhi: In a $2 billion (Rs8,080 crore), two-year deal, Sweden’s Ericsson will help Bharti Airtel expand as it looks to tap rural markets to maintain growth. Under the deal announced Wednesday, Ericsson will help design, plan, deploy and manage Bharti Airtel’s GSM operations across 15 of India’s 23 telecoms “circles” or zones, the firms said in a statement.
Henry Stenson, an Ericsson spokesman in Stockholm, said the revenue from the contract would come predominantly in 2008 and 2009. “Approximately half of it will be in one year, and the rest in the next year, so about $1 billion per year.”
Mobile service providers in India, the world’s fastest-growing mobile market, are upgrading networks as they expand from saturated larger cities into smaller towns and villages to chase customers.
“This is the biggest deal our company has got into. It is a clear testimony to the big growth that is taking place in this market,” Akhil Gupta, group managing director for parent Bharti Enterprises, told reporters in New Delhi.
Mobile penetration in the rural market is low at 2%, but this presents an immense opportunity for cellular companies, global tracking agency Gartner said.
Jan Ihrfelt, an analyst at Swedbank in Stockholm, said the contract had not come as a surprise: “It’s been to a very large extent expected,” he said. Ihrfelt said, however, the short-term impact for Ericsson could be greater than previously thought since the contract was for two years, rather than three years as Swedbank had expected.