Chinese Look to India Win
According to a report in the Economic Times of India, the state-owned carrier is issuing a tender for a 16.5 million line GSM network expansion contract that could cost up to 60 billion rupees (US$1.3 billion).
The initial contract is expected to be an 11 million line project to be distributed among multiple vendors, with an option to expand by a further 50 percent.
Analysts at Lehman Brothers name Nokia Corp. (NYSE: NOK), Motorola Inc. (NYSE: MOT), LM Ericsson (Nasdaq: ERICY), Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Nortel Networks Corp. (NYSE/Toronto: NT), Siemens AG (NYSE: SI; Frankfurt: SIE), ZTE, and Huawei as companies already bidding for the contract spoils.
In light of previous deals with the carrier, both Motorola and Ericsson stand out as strong candidates, but it is the presence of ZTE and Huawei that really has the Lehman siblings drooling over their pin-striped suits (see Moto Wins Indian GSM Deal and Ericsson Does GSM in India).
The investment bank notes that BSNL “has been the most active amongst India’s operators in deploying Chinese equipment,” awarding a $50 million CDMA2000 1x contract to ZTE early last year.
Huawei meanwhile has also seen commercial success in the region, signing a 50,000 line OMSAN (Optical Multiple Service Access Network) supply contract with private fixed-line carrier HFCL Infotel.
“Given the success of Chinese vendors ZTE and Huawei in recent tenders, we would expect either one or both to win a significant fraction of this newest contract,” write Lehman analysts in a research note.
“Although ZTE and Huawei are growing as equipment suppliers to domestic mobile operators China Mobile and China Unicom, both vendors have grown their overseas mobile businesses through contracts largely inked in the developing world.” (See Iraq Plays Global Game, AIS Picks Huawei in Thailand , and Huawei Builds Out MegaFon.)
Research firm EMC gives BSNL a subscriber base of 4.8 million as of December 2003, a 22 percent market share. The network expansion is expected to be deployed over 18 to 30 months.
The project is in keeping with India’s standing as one of the world’s most explosive wireless markets. Lehman Brothers forecasts expect the region to reach 50 million subscribers by the end of 2004, and 100 million by August 2006.
Current growth of 1.3 million additions a month has also led the Cellular Operators Association of India (COAI) to claim that India will challenge China as the world’s largest wireless market in the next few years (see Global Vendors to Rule China? and India Curries Wireless Favor).
— Justin Springham, Senior Editor, Europe, Unstrung