A consortium led by Tech Mahindra has emerged as a prominent bidder for a 4G upgrade by BSNL, a state-backed Indian telco, after Chinese vendors were banned from the project.

BSNL had previously planned a 4G overhaul at about 47,000 mobile sites, including the modernization of networks in Delhi and Mumbai owned by MTNL, another state-backed operator with which BSNL is set to merge.

But a tender worth about 90 billion Indian rupees ($1.2 billion) was canceled when authorities barred India's state-owned telcos from using equipment developed by Huawei and ZTE.

Better known as an IT systems integrator, Tech Mahindra has recently partnered with state-run ITI on the design and manufacture of 4G and 5G equipment for the Indian market. It also provides software products to global service providers including US telco giant AT&T.

Comviva, a Tech Mahindra subsidiary, offers mobility products to service providers in several markets.

Tech Mahindra has also made an investment in Altiostar, a US developer of software for radio access networks.

Yet a deal with BSNL would herald Tech Mahindra's arrival in the market for telecom equipment, today dominated by Huawei, Sweden's Ericsson and Finland's Nokia.

Its involvement in the tender came only when Chinese firms were barred from it. While the government decision clearly creates opportunities for Indian vendors, taking on China's price-competitive firms would have been difficult. (See Indian backlash against China spells opportunity for homegrown vendors.)

BSNL's revised 4G tender is likely to give a significant price advantage to locally designed and manufactured equipment, in keeping with the "Make in India" and Atmanirbhar (self-reliant) government initiatives.

"Make in India" is an ambitious project launched by the government to position India as a manufacturing hub. Authorities are also keen to promote the use of domestic products as part of the Atmanirbhar initiative.

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India's appeal has risen following several rounds of consolidation, reducing the number of telcos from between ten and 12 in each circle (service area) to just three private-sector operators and one state-owned firm. This has increased their prospects for better margins and profitability.

Several Indian operators have also received an injection of funding in recent months, providing capital for investment in network modernization. And ongoing digitization, spurred by the COVID-19 pandemic, could increase the size of their addressable market.

Vendors including Tejas and Tech Mahindra have mainly focused on the international market, but that could change if India firmly shuts the door on Huawei and ZTE.

What remains to be seen is whether India's vendors have the capabilities to fill the space left vacant by the Chinese firms.

— Gagandeep Kaur, contributing editor, special to Light Reading