Mumbai: Reliance Communications Ltd (RCom) said Wednesday it signed a multi-year network management contract valued in excess of $1 billion (around Rs. 5,500 crore) with Alcatel-Lucent India , which provides support to telecom operators, for improving its network.
The contract, which is for services in eastern and southern India up to 2020, covers wireless, wireline and enterprise services and could help reduce operating costs of the telco by up to a fifth. RCom had Rs.36,723.4 crore of net debt as of September 2012.
RCom, which formed a network management joint venture with Alcatel-Lucent in 2008, said that had been converted into the present contract. It is expected to announce another contract for network management in the northern and western India.
As part of the deal, RCom will move 4,000 employees to Alcatel-Lucent. “It’s more than just managing network but a transition to improve the network,” Rajeev Singh-Molares, Alcatel-Lucent’s Asia Pacific president, said at a press meet in Mumbai.
“This will enable Reliance Communications to take the lead in offering next generation telecom solutions that will meet and exceed the expectations of our customers, and help them to transit from voice-led usage to a seamless data experience across multiple devices and platforms,” Gurdeep Singh, chief executive, RCom’s wireless business, said.
RCom provides high speed data coverage in over 1,300 towns in India and serves 26 million data customers, out of which 4.8 million are active 3G customers, the highest in the industry, according to the company. As per the latest Telecom Regulatory Authority of India data, broadband subscriptions reached 14.88 million in November 2012.
“Data penetration in India is just 1% and the base for data subscribers in India is still low. Non-voice revenue contribution to Indian telcom companies’ mobile business is already about 14% on average. There is room for growth; internationally, non-voice revenues for telecom companies is about 25 to 30%” said Abhishek Anand, research analyst at Centrum Broking Pvt. Ltd. “With revenues from voice services stagnating, future growth is likely to be driven by wireless data services. (Indian) telcos have already invested significantly in acquiring spectrum for 3G and broadband wireless access (BWA) and are now expanding their footprint across the country, albeit cautiously,” rating agency ICRA Ltd said in its September 2012 report, Telecom Sector: Trends and Outlook.
RCom’s stock closed 5.93% lower at Rs.80.95 on BSE, while the benchmark Sensex dropped 0.85% to 19,817.63 points.