& cplSiteName &

India's 3G Equipment Market a 'Bloodbath'

Light Reading
News Analysis
Light Reading

Brutal market conditions, coupled with the cautious approach of the mobile operators, are forcing the network equipment vendors in India to slash their prices, and even offer systems for free, in order to retain their customers, according to industry sources.

The Indian government finally auctioned 3G spectrum to India's privately held carriers earlier this year, a move that was expected to generate network upgrade and rollout deals worth billions of dollars. (See India's 3G Auction Ends, Raises $14.6B.)

Some early deals have indeed been awarded, as several 3G license holders have moved quickly to get their services into the market. (See Huawei Bags India 3G Deal and Tata Goes 3G With NSN.)

But the market isn't shaping up to be as lucrative as the vendors had hoped, as an already highly competitive landscape with razor-thin margins appears to have become even tougher for the technology suppliers.

"There is a bloodbath in the industry. The market was always competitive, but now even the premium vendors like Nokia Networks and Ericsson AB (Nasdaq: ERIC) are undercutting and offering freebies to retain the operators as customers," an industry source, who requested anonymity, tells Light Reading Asia.

In addition, the operators have adopted a cautious approach to capex after spending billions on securing their 3G spectra. As a result, they are adopting phased 3G network rollout strategies, a move that is spreading their planned 3G capital expenditure over a longer period.

"We feel that the Indian market size for 3G equipment is not more than $2 billion for this [financial] year," says Neeraj Jain, a director at KPMG International. "The operators are going for a restricted rollout of their 3G networks. Secondly, they have spent so much on the spectrum that they are looking for deals that help them to bring down the rollout cost. For this reason, the capex is going to be much lower than anticipated."

India's 3G infrastructure market in the current financial year, ending March 31, 2011, had previously been valued at about $3 billion: Now, almost overnight, it looks to have shrunk by about a third.

Europeans behind the pricing pressures
In the past, pricing pressure has often been caused by the marketing tactics of the Chinese equipment vendors such as Huawei Technologies Co. Ltd. But -- in India, at least -- the dynamics appear to have changed. In the 3G market, it seems the cut-throat infrastructure offers are being made by the European vendors, while the Chinese vendors highlight their professional services offerings in order to retain and attract carrier business.

"The Chinese players are no longer competing on price. They have realized that a price strategy is not sustainable in the long run, and they are pitching on services," states Nokia Siemens Networks spokeswoman Kanika Atri.

Ericsson declined to comment on the matter.

The suggestion that it's now the European vendors that are squeezing the network deal margins is corroborated by another industry source, who also wished to remain anonymous because of the sensitive nature of the subject: "In the last two deals, Nokia Siemens has actually beaten Huawei in price, so there is a new-found aggression in them -- they are going all out to get the maximum share of this market."

Nokia Siemens Networks recently announced a 3G contract with Tata Teleservices Ltd. that covers rollout in four circles (service areas), a deal that is believed to be worth between $200 million and $250 million, says the source. Tata Teleservices, which won 3G spectrum in nine circles, awarded Huawei the deal for the remaining five circles. (See Huawei Bags India 3G Deal.)

NSN, it should be noted, stated late last year that it intended to become more aggressive in the global market in order to win back lost market share. (See NSN Targets Greater Market Share and NSN CEO: Don't Write Our Obituary.)

Adding to the pressure on the vendors is the shortfall in business that most of them suffered during the first half of the year, when most telecom infrastructure orders were delayed while the Indian government dealt with various security concerns. (See India Clears Way for Chinese Imports, Ericsson CFO: India Bottleneck Easing, and India Holdups Smack NSN's Q2.)

"There is a climate of uncertainty in the market. There have been security concerns, and everybody [is] under pressure to meet their targets. [The vendors will] be offering a lot of freebies or bringing down the prices to capture the maximum share of the market," says Shiv Putcha, a principal analyst at Ovum Ltd.

With the 3G spectrum having been allocated earlier this month, and the purchase order bottleneck cleared, the market is expecting many initial 3G network deals to be announced in the coming few weeks, as most of the operators are looking to launch their initial 3G services by the end of this year or early next year, even if those launches are limited to just a few circles. (See India Gets Its 3G On and India's 3G Players Ready for Swift Launch.)

Market reports suggest that Vodafone India , Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. , Idea Cellular Ltd. , and Aircel Ltd. are set to announce 3G equipment contracts by the end of September. (See Reliance Sets Out Its 3G Stall.)

— Gagandeep Kaur, India Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Sabre
12/5/2012 | 4:23:50 PM
re: India's 3G Equipment Market a 'Bloodbath'

"In the 3G market [in India], it seems the cut-throat infrastructure offers are being made by the European vendors, while the Chinese vendors highlight their professional services offerings in order to retain and attract carrier business."

This is role-reversal on an epic scale, isn't it.

Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Friday, October 28, 1:00PM EDT
Security: The Plusses and Minuses of Open Source Software
Nick Feamster, Acting Director, Center for Information Technology Policy, Princeton University
Wednesday, November 16, 1:00PM EST
SDN 101
John Isch, Practice Director, Network & Voice, Orange Business Services
Friday, November 18, 1:00PM EST
SDN & Open Source
Christopher W. Rice, Senior Vice President of AT&T Labs, Domain 2.0 Architecture and Design
Wednesday, November 30, 1:00PM EST
SDN & the Software Defined Data Center
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
OneAccess NFV Solutions

10|26|16   |   5:30   |   (0) comments

Antoine Clerget, CTO of OneAccess, discusses how his company has expanded its product line from enterprise-class routers to include a universal virtualized CPE as well as a suite of VNFs to help telco customers evolve to an NFV future.
LRTV Custom TV
The Journey Toward Carrier-Grade WiFi

10|26|16   |   3:39   |   (0) comments

In this Light Reading interview, Dave Sperling, CTO at Smith Micro Software and active participant of the WBA's policy working group, discusses the need for carrier-grade WiFi. Technical and business challenges slowing the fulfillment of this goal are addressed, as well as management strategies that will enable communication service providers to optimize end user ...
LRTV Custom TV
ZTE BBWF Highlights

10|26|16   |     |   (0) comments

At BBWF 2016, ZTE showed a broad range of innovative technologies that are kick-starting an ultrafast broadband journey.
LRTV Custom TV
Next-Generation Technology Beyond DOCSIS 3.1

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Liu Jianhua speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Hybrid Video Solutions to Change TV, Change Future

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Ian Locke speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei Future-Oriented Giga Coax Network

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Allen Wang speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei at SCTE 2016

10|20|16   |     |   (0) comments

Join Alan Breznick of Light Reading and take a sneak peek at the Huawei booth at SCTE 2016.
LRTV Custom TV
Assuring Network Quality in a Rapidly Changing Environment

10|20|16   |     |   (0) comments

As the rate of change and complexity increases in agile networks, the importance of introducing DevOps methodologies for integrating active test and assurance solutions throughout the full service lifecycle becomes critical to ensure that customers are experiencing the service quality they demand. The industry landscape is changing, and software-based test and ...
Telecom Innovators Video Showcase
A10 Networks on Service Providers' Industry Needs

10|20|16   |     |   (0) comments

Light Reading's Steve Saunders hears how A10 enables service providers to accelerate, secure and optimize their application delivery to drive down costs, enhance service availability, and better respond to customer requirements, so they can improve customer satisfaction, monetize their network, and grow revenues.
LRTV Custom TV
New NFV Use Cases for Cable TV

10|19|16   |     |   (0) comments

A large number of NFV use cases are focused on the enterprise domain, looking at virtualization of customer-premises equipment (CPE). To date, there has been little focus on the use cases and business case for virtualization of the video content delivery networks required to deliver unicast and streaming video to consumers. Amdocs commissioned Analysys Mason to ...
Women in Comms Introduction Videos
Meet the Future Workforce: New Faces, Expectations & Motivations

10|19|16   |   5:33   |   (1) comment

Millennials and their younger peers, Gen Z, expect more out of their network and more out of their work. Intel's Lynn Comp shares how the industry can prepare for this new generation of workers.
LRTV Custom TV
ZTE Global Services User Congress 2016 Highlights

10|19|16   |     |   (0) comments

ZTE held its 2nd Global Service User Conference in Dusseldorf on October 13-14. Representatives from network operators, leading industry analysts and ZTE senior expertsattended the event, exploring the best practice in managed services and the vision to transform network operations into the operations center of the future (OpCF) in the software-defined networking ...
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Attacks Have Major Internet Sites on the Ropes
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/21/2016
Trump: Dump AT&T/TW & Comcast/NBC
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/24/2016
Layer3 TV Comes to Town, Hints at Future
Mari Silbey, Senior Editor, Cable/Video, 10/21/2016
T-Mobile: AT&T & TW Means Ma Bell Not Focused on Mobile
Dan Jones, Mobile Editor, 10/24/2016
Sprint: Revenue up 3%, Capex Will Rise Again
Dan Jones, Mobile Editor, 10/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
'Oh, Were You Looking for This?' Click Here
'I was just playing some games...'
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.