By S Bhatnagar and C Somayaji/Bloomberg
New Delhi: Ericsson AG, the world’s biggest maker of wireless networks, and Nokia Oyj will split most of a $5 billion (Rs2,10,469 crore) contract to supply gear in India after Motorola Inc. dropped its legal challenge to the award.
Ericsson will supply 60% of the equipment for 45.5 million lines to Bharat Sanchar Nigam Ltd., with Nokia providing 40%, D P Singh, director general at the Indian telecommunications company, said in New Delhi. State-controlled ITI Ltd will supply equipment for 18 million lines.
India’s wireless operators, including Bharti Airtel Ltd and Reliance Communications Ltd, will spend about 40% of their $20 billion of capital expenditure in the next two fiscal years on equipment, said analyst Shubam Majumder. Motorola, based in Schaumburg, Illinois, said it withdrew its petition before a New Delhi court to focus on winning new contracts.
“India is adding more subscribers than any other country,” Majumder, an analyst at Macquarie Securities Ltd, said in an interview from Mumbai on 16 April. “It’s by far the biggest market for 2G equipment vendors worldwide.”
India, where fewer than two in 10 people have a mobile phone, is the world’s fastest-growing wireless market. With a population of 1.1 billion, India is adding almost 7 million subscribers a month as local mobile call rates fall to as low as 2 US cents a minute.
Ericsson had submitted the lowest bid, P. Balaji, vice president of marketing for the Swedish company’s Indian unit, said on 9 October after Bharat Sanchar said it is eliminating Motorola and China’s ZTE Corp.
“We are almost ready with the paperwork and can place the order in a maximum of two weeks to the two short-listed bidders,” S. D. Saxena, director of finance at Bharat Sanchar, said in a phone interview from New Delhi. “We are desperate for new equipment and it will help in expanding our telecom services in rural areas.”
Motorola and ZTE were disqualified from bidding in October on grounds that they didn’t meet technical qualifications.
“In view of the tremendous telecom growth taking place in the country and Bharat Sanchar’s petition of capacity constraints to have its share in this expansion, Motorola has decided to withdraw the case filed in the Delhi High Court,” Motorola said in an e-mailed statement on 16 April.
The size of Bharat Sanchar’s order will pale in comparison with those awarded by Bharti and Reliance Communications, India’s two largest wireless operators, in the next few years, Majumder said. Bharat Sanchar is crippled by the government- managed bidding process, unlike the private operators, he said.