New Delhi: Telecom equipment vendors Huawei Technologies Co. Ltd, Telefon AB LM Ericsson and Nokia Siemens Networks are pursuing a supply contract that could be worth up to $4.8 billion, or Rs18,960 crore, with Tata Teleservices Ltd (TTSL), India’s fifth largest wireless phone services firm by subscribers, which intends entering GSM-based mobile phone services.
The news of the equipment purchase, for which Tata Teleservices has floated a request for proposals from vendors, comes on the heels of Reliance Communications Ltd, or RCom, the country’s second largest mobile phone services firm by customers, placing an equipment contract on Huawei, a Chinese telecom equipment maker.
New player: Tata Teleservices managing director Anil Sardana.
At least three people close to the equipment purchase by the Tata firm confirmed the tender. Tata Teleservices is “estimating the scope of contract to be over 30 million GSM phone lines,” one person said, requesting anonymity. “This could go up to 60 million lines, depending upon the availability of radio spectrum and the company’s business plan.”
State-run Bharat Sanchar Nigam Ltd had, last year, placed an order for around 12 million phone lines with Ericsson at a price of $107 per line. Depending on the volumes in the Tata contract, “the order could be priced anywhere between $60 and $80 per line,” the person said.
A Tata Teleservices spokesman said it was too early to comment on the contract.
Both RCom and Tatas, firms that use code division multiple access, or CDMA technology, were allowed by the Department of Telecommunications to start phone services using GSM technology, a rival platform that serves around 75% of the 230 million mobile phone customers in the country.
In a recent interview, Tata Teleservices managing director Anil Sardana had said the decision to shift to GSM was driven by regulatory benefits GSM players enjoy.
As reported by Mint last week, telecom equipment vendors will be chasing contracts worth almost $8 billion in India over the next two-three years, as these CDMA firms, as well as new entrants such as Unitech Ltd and S Tel Ltd, roll out networks based on the GSM standard.
According to trade body Telecom Equipment Manufacturing Association, India’s market for telecom switches and other networking equipment is worth Rs45,000 crore annually. This excludes the telecom handset business, which is worth Rs23,452 crore, according to the Indian unit of International Data Corp., or IDC.
In a June statement, IDC said the wireless infrastructure category alone clocked Rs16,677 crore in revenues in 2007. Huawei, which already has Maxis Aircel Ltd as a key Indian customer, says India will contribute over $1 billion this year to its global revenues, up from $188 million in 2006. “We offer GSM equipment of same quality as the western suppliers, at almost 10% gap in cost,” said Lin Yan Qing, director of marketing at Huawei’s Gurgaon office.
China still is Huawei’s biggest market, accounting for over $4 billion of around $16 billion revenues it reported in 2007. Globally, Huawei has been gaining market share against more established rivals In the quarter to December last year.
“Huawei edged out both Ericsson and Nokia Siemens Networks with 34% of total contracts,” said Earl Lum, founder and president of Redwood City, California-based researcher EJL Wireless Research in a 9 January statement.