- The government of India might cancel a contract given to Chinese telecom gear manufacturers for BSNL
- Rumors suggest that the private telcos might also be barred from using Huawei and ZTE gear
The government of India advising private telecom players not to source telecom gear from the likes of Huawei and ZTE may cost the likes of Airtel and Vodafone 15 to 20 per cent extra. A report published in the financial express states that if such an advisory is issues, the industry will oppose it tooth and nail.
Although, such an advisory has not been issued as of yet but the government, as per recent reports, is thinking of cancelling an equipment tender for BSNL with China-based telcos. It might just be a matter of time before an exact advisory is floated for private telecom players operating in India.
Another point to be noted here is that the share of Chinese companies in India’s telecom equipment and gear vertical is around 25 per cent. The size of this industry is pegged around Rs 12,000 crore.
Chinese companies are beyond economical gear and equipment
Apart from the competitive prices that Chinese companies offer to telecom players, their vendor financing schemes also help the players in sourcing these easily. In fact, the vendor financing schemes adopted by the likes of ZTE and Huawei have helped them compete against other players during the last decade.
It is to be noted here that the 2G and 3G networks for Bharti Airtel and Vodafone Idea were built by Nokia and Ericsson. However, as the telcos are upgrading networks to 4G, the share of China-based vendors like Huawei are going up.
BSNL’s 3G network is largely built by China’s ZTE. The latter has been responsible for BSNL’s 40 per cent 3G network. The former does not have a 4G network yet.
This move of barring the two (Huawei and ZTE) comes at a time when almost every telco is gearing up to deploy 5G networks in India. The value of telecom equipment industry in India is around Rs 12,000 crores. While the industry comprises of likes of Ericsson, Nokia and Samsung, China-based players account for a fourth of the same.
It is to be noted here that the Prime Minister of India, had recently said the country would retaliate if instigated by China. The tensions between the defense forces of these two countries seem to be rising at the Galwan region.