& cplSiteName &

India's 3G Equipment Market a 'Bloodbath'

Light Reading
News Analysis
Light Reading
9/14/2010
50%
50%

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
shygye75
50%
50%
shygye75,
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.

From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
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 Interviews
Masergy: It's Time for SD-WAN Options

6|28|17   |   03:09   |   (0) comments


Paul Ruelas, director of network products for Masergy, explains how adding SD-WAN has changed the service mix for his company's customers. In some cases, the change is incremental, enabling more granular customer control. Masergy's newest version, SD-WAN Go, gives up some of those controls for a streamlined version targeting mid-sized customers with the most ...
Women in Comms Introduction Videos
Intel Ushers in the Revolutionary 5G Era

6|28|17   |   5:00   |   (1) comment


5G will bring job opportunities for women in telco and IT, as well as a whole new era of communications for consumers and industries of all kinds, says Caroline Chan, vice president and general manager of the 5G Infrastructure Division at Intel.
LRTV Custom TV
VeEX at ANGA COM

6|27|17   |     |   (0) comments


At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Hulu Is Greatest Threat to Pay-TV Providers – Study
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 6/27/2017
Calix: Russo's Not-So-Overnight Success?
Carol Wilson, Editor-at-large, 6/28/2017
Verizon Takes 'One Fiber' to More Cities
Mari Silbey, Senior Editor, Cable/Video, 6/22/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.