US’s ZTE ban may affect Indian telcos’ 4G plans2 min read . Updated: 25 May 2018, 08:27 AM IST
Firm, which has halted operations, is main supplier of 4G gear in India
New Delhi: A recent US ban on ZTE Corp., which led to the Chinese network gear maker suspending major business operations, is likely to hit Indian telcos currently expanding 4G network deployments, two persons aware of the matter said.
“Almost 80% of all 4G equipment for most operators across telecom circles has been deployed by ZTE. Indian telcos are awaiting clarity on whether the ban will be lifted or not as they depend on ZTE currently for servicing of 4G equipment and spare parts, etc.," one of the two persons cited above said, requesting anonymity.
ZTE’s customers in India include telcos such as Vodafone India Ltd, Idea Cellular Ltd, Bharti Airtel Ltd, and even public sector operator Bharat Sanchar Nigam Ltd (BSNL).
BSNL recently awarded a $400 million contract to ZTE to set up base transceiver stations.
The public sector unit had awarded contracts to ZTE and Nokia in September 2017 as part of its Rs6,000 crore-plan to install 40,000 transceiver stations in the next two years to expand its mobile network.
Apart from 4G deployments, ZTE is also working with Airtel, Vodafone and Reliance Jio for 5G trials.
“It is difficult to immediately quantify the amount of material impact on Indian telcos as the ban has just been imposed but telcos will definitely be hit, given the fact that they want to aggressively expand 4G networks," the second of the two people said on condition of anonymity.
The ban comes at a time when telecom operators have raised spending on 4G after the entry of Reliance Jio in September 2016, squeezing tariffs and hitting rivals’ revenue.
The network expansion is also essential for India as it is witnessing unprecedented consumption of data.
According to regulatory data, for October-December 2017, the average data usage per subscriber per month was 1,945 MB, much higher than 878 MB in October-December 2016.
ZTE, Airtel, Vodafone, Idea Cellular, Reliance Jio and BSNL did not respond to emails seeking comment.
ZTE, which competes with companies like Huawei, Nokia and Ericsson, has built a large telecom infrastructure business in the US.
ZTE estimates losses of at least 20 billion yuan ($3.1 billion) due to Washington’s ban on US firms supplying the telecommunications firm, Bloomberg reported on 23 May.
The Chinese company said on 9 May that it has halted major business operations after the ban.
“Major operating activities of the company have ceased," ZTE had said in a regulatory filing on 9 May.
This was a few weeks after the US Commerce Department banned American companies from selling components to ZTE, on grounds that the Chinese company violated the terms of a 2017 settlement over the evasion of US sanctions against Iran and North Korea.
ZTE Corp. depends on US components, such as chips from Qualcomm Inc., to build its smartphones and network equipment.
The 9 May statement by the Chinese company, however, did not clearly quantify the extent of the halt of operations but added that it had sufficient cash and strictly adhered to its commercial obligations.
President Donald Trump on 23 May had said there is no deal with China to lift the ban on ZTE Corp., as lawmakers from both parties worked to block him from easing penalties on the Chinese telecommunications company, according to a Reuters report, which added that Washington would lift its ban on US firms supplying ZTE in return for agricultural concessions from China.