India to Up Global Capex?India to Up Global Capex?
Regional network deals could lead to massive global capex increase in 2004
March 12, 2004
Growth in India’s expanding wireless industry could have a potentially massive impact on global wireless capex this year, with LM Ericsson (Nasdaq: ERICY) and Motorola Inc. (NYSE: MOT) the likely beneficiaries of any investment.
In a report this week, UBS Warburg claims that “planned network expansions in India could drive global wireless capex growth of 6-7 percent in 2004, versus our current 4 percent growth estimate.”
According to analyst Nikos Theodosopoulos, Tata Teleservices Ltd., Bharat Sanchar Nigam Ltd. (BSNL), and Bharti Tele-Ventures Ltd. are likely to be the key drivers of this incremental spend.
Tata! is in the process of rolling out a nationwide Code-Division Multiple Access (CDMA) network, while Bharti is upgrading its Global System for Mobile communications (GSM) service. BSNL is also touting a potential $1.3 billion contract tender for a 16.5 million line GSM network expansion (see Chinese Look to India Win).
Theodosopoulos states that U.S. vendor Motorola and Sweden’s Ericsson “are the best-positioned equipment vendors to benefit from these projects, with each controlling 30-35 percent of the Indian wireless equipment market.”
Both vendors have notched up a bevy of contract wins in the region and are the only two players in India to have both GSM and CDMA product offerings (see Moto Wins in India, Ericsson Networks Bharti Tata Takes Moto's 1X, and Ericsson Does Tata CDMA).
Ericsson is also regarded as a likely candidate for any future Bharti network deal, in light of the carrier’s decision last week to appoint ex-Ericsson CEO Kurt Hellström to its board of directors (see Bharti Appoints Hellström).
Growth in India’s wireless sector is among the fastest in the world, with about 1.3 million subscriber additions a month. Lehman Brothers expects the market to hit 50 million subscribers by December 2004 and 100 million by August 2006 -- up from its current base of approximately 31 million out of a population of 1 billion.
— Justin Springham, Senior Editor, Europe, Unstrung
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