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Huawei Confident of Indian Import Resolution

Light Reading
News Analysis
Light Reading

The imbroglio that has seen Indian carrier purchase orders for Chinese technology blocked for most of this year is likely to be sorted out soon, a Huawei Technologies Co. Ltd. executive tells Light Reading Asia. (See No Respite for Chinese Vendors.)

Part of the process towards finding a solution that will satisfy all parties, including the Indian government's security services, is the suggestion that independent security audit firms should screen technology imports. (See Indian Reprieve for Chinese Vendors .)

And according to a Huawei source, the plans to set up a technology approval process are close to being finalized.

"The government is in the process of drawing a list of the firms [both in India and abroad] that will carry out the security tests on the equipment from all the vendors. We believe that this issue will be sorted out by the end of this month," a senior (and optimistic) Huawei executive said on the sidelines of Light Reading's Mobile Broadband Summit 2010 in Mumbai. (See India's 3G Players Ready for Swift Launch.)

The comments came just as P. J. Thomas, secretary of the Department of Telecommunications , chairman of the Indian government's Telecom Commission, and a speaker at the Mobile Broadband Summit, told the media that the government and the telecom sector were working towards a solution, reported Reuters. (See Photos From Our Mobile Broadband Summit, I.)

The Huawei executive, who requested anonymity, said the vendor is also seriously considering plans to start manufacturing its equipment in India. Huawei had already been looking at that possibility, but is now likely to accelerate its plans to help overcome the current concerns about the security of imported technology products.

ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), one of the other Chinese vendors to have suffered as a result of the current technology purchase clearance rules, already has a small equipment assembly unit at Manesar, not far from New Delhi. It has also talked about plans to have a manufacturing unit in the country.

When asked what sort of financial impact the current situation has had on Huawei, the executive said that since the company is not listed on any stock exchanges, "we are not under pressure to come out with quarterly results. We still have about six months to make up for the lost time."

Besides time, the company might need luck on its side to recover the situation. Even if the security audit process is approved and set up, and the government starts approving purchase orders for Chinese equipment, it will likely be some time before India's operators become confident again of ordering equipment from China.

The Chinese vendors, a group that also includes UTStarcom Inc. (Nasdaq: UTSI), have been embroiled in a security storm since February this year, when the Indian government stopped approving the purchase of any equipment sourced from China.

Huawei and ZTE have already been overlooked in major deals, a situation that will worsen if clearance for Chinese purchases isn't approved by the time India's new 3G spectrum owners start ordering their next-generation mobile access equipment. (See BSNL Blocks Huawei, ZTE Bids and India's 3G Auction Ends, Raises $14.6B.)

Should the situation persist, it would continue to hand a somewhat unfair advantage to the likes of Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), Nokia Networks ), and Motorola Inc. (NYSE: MOT).

— Gagandeep Kaur, India Editor, Light Reading

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User Rank: Light Beer
12/5/2012 | 4:30:18 PM
re: Huawei Confident of Indian Import Resolution

Even if a decision is made soon on how to approve equipment, it's hard to imagine the process will be in place any time soon. It looks like the Chinese firms might be penalized for quite some time.... tough call...

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