However, its crown is under threat, as Nokia Networks and Huawei Technologies Co. Ltd. have made up ground in the 3G market.
Earlier this year seven operators successfully bid for 3G spectrum in India's 22 circles (service areas), with multiple licenses being awarded in each circle. Six operators have announced their chosen vendor partners, with S Tel Pvt. Ltd. , which holds 3G licenses in just three circles (and which is due to make its 3G procurement decisions next year), the exception. (See India's 3G Auction Ends, Raises $14.6B and India's S Tel Eases Toward 3G Launch.)
The six operators that have made their decisions, though, account for the vast majority (68 of 71) of the 3G licenses awarded, and their choices of vendor partners makes for interesting reading.
The highly competitive and cutthroat 3G vendor market seems to be almost evenly divided among three players -- Ericsson, Nokia Siemens Networks (NSN), and Huawei. (See India's 3G Equipment Market a 'Bloodbath'.)
Table 1: 3G contract awards in India
|3G operators||No of circles in which 3G licenses held||Awarded to Ericsson||Awarded to NSN||Awarded to Huawei||Awarded to ZTE|
As the table above shows, Ericsson has been awarded deals by four operators covering 21 separate 3G licenses, closely followed by NSN, which has equipment orders from five operators covering 20 licenses. (See India's Vodafone Essar Names 3G Suppliers and Aircel Preps 3G Vendor News .)
The biggest surprise, though, is that Huawei, which looked to be hampered by the temporary security restrictions in place earlier this year, has orders from five operators covering 18 licenses. (See India Clears Way for Chinese Imports.)
Others didn't fare so well. ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) was awarded 3G deals by just two operators, Reliance Communications Ltd. and Aircel Ltd. , while Alcatel-Lucent (NYSE: ALU) is totally absent from the 3G market. (See Reliance Hands 3G Deal to ZTE and 3G Heralds Managed Services Shift in India.)
Analysts believe Huawei has gained market share at Ericsson's expense. "NSN was anyway in the second position and they have neither gained nor lost too much," says Alok Shende, director and principal analyst at Ascentius Consulting. "It is Ericsson that has lost and Huawei is the one which has gained the maximum," he adds. (See Tata Goes 3G With NSN and Huawei Bags India 3G Deal.)
This change is a reflection of a bigger change taking place in the Indian market. Industry sources as well as analysts believe Huawei is likely to snatch away more market share from Ericsson if the Chinese vendor is able to successfully deliver against its initial 3G contracts.
Huawei's success in the 3G market has been notable. It has managed to break into Bharti Airtel, India's largest mobile operator, for the first time, and has deals with all the major 3G license-holders except Vodafone India . If the company delivers on its present deals, it will be a front runner in the battle to win upgrade and expansion contracts in the coming years.
While Huawei has done well, though, the Indian operators have played it safe by handing out the deals covering the major metro circles to the more established European players. Vodafone has awarded three metros (Mumbai, New Delhi, and Kolkata) to Ericsson, while Aircel Ltd. and Bharti Airtel Ltd. (Mumbai: BHARTIARTL) also awarded their main metro deals to European vendors, according to industry sources.
Overall, the initial value of the 3G market has been a disappointment for most of the vendors. The vendor market had expected the first wave of rollouts to generate US$3 billion of new business, but initial estimates put the figure at around US$2 billion. "Huawei was looking at crossing the $1 billion mark in the 3G market, but that didn't happen. The company was expecting more business from Tata Teleservices Ltd. [Tata Docomo] and Reliance Communications Ltd. ," says an industry source. Both Tata Docomo and Reliance Communications awarded just five circles each to Huawei.
Huawei isn't the only disappointed vendor, as ZTE had been hoping to capture a larger share of India's 3G equipment market than it has achieved.
— Gagandeep Kaur, India Editor, Light Reading