Managed Services

India Watch: Vendor Lockdown

There's never a dull moment in the Indian telecom sector, apart from the ongoing 3G spectrum auction that's on course to raise billions of dollars for the government. (See India 3G Auction: Day 17.)

During the past few days the latest subscriber numbers have been revealed, showing there's no letup in demand for new mobile connections; some interesting deals have been struck; and Indian companies have been releasing their latest financial reports. (See Bharti Needs More Data Drive and Subex Reports Full Year.)

And, of course, there's some scandal.

The latest controversy has potentially dire implications for Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), but they're not the only vendors currently hamstrung by state security concerns.

Government slaps ban on Chinese equipment
The Department of Telecom (DoT) has requested India's network operators to halt any imports of equipment from any Chinese vendors, including Huawei and ZTE, because of potential security concerns, reports The Hindu Business Line.

If that ban isn't lifted soon it could seriously hurt the duo's plans to play major roles in 3G network rollouts, and delivery of smartphones, in India once licenses are awarded and network planning begins.

The DoT's move appears to be an extension of an earlier order, issued in December 2009, which requires operators to seek clearance from the DoT before any equipment purchase orders are placed.

It's believed that move was intended to intercept any orders heading to China. But the new rule appears to have affected all planned equipment purchases, whether they were due to be placed with Chinese vendors or not, as no orders have been approved since mid-December, according to a report by Voice&Data.

Mobile market approaches 600 million
India ended March with 584.3 million mobile connections, up by more than 20.3 million from the end of February. That means that, on average, 455 new mobile connections were activated every minute in India last month.

That's insane. It's easier to get your head around string theory than that statistic.

There are now 15 mobile operators in the country, with Videocon and Etisalat (formerly Swan Telecom) making their debuts in March: They signed up 32,178 and 354 customers, respectively, so humble beginnings.

By contrast, Bharti Airtel Ltd. (Mumbai: BHARTIARTL) is the market leader, with its 127.6 million GSM customers giving it a 21.8 percent market share.

Reliance Communications Ltd. and Vodafone India are the next largest players, with 102.4 million (17.5 percent share) and 110.9 million (17.3 percent share), respectively.

MTS India outsources to AlcaLu JV
Alcatel-Lucent Managed Services, the joint venture between Alcatel-Lucent (NYSE: ALU) and Reliance Communications, has, it seems, won a deal to run the network operations of Sistema Shyam TeleServices Ltd. (a.k.a. MTS India) in three circles (service areas), according to The Hindu Business Line.

This is the first deal the joint venture has won outside of the Reliance empire. (See AlcaLu, Reliance Form Joint Venture and AlcaLu, Reliance Laud JV.)

Other news of interest from India includes:

— Ray Le Maistre, International Managing Editor, Light Reading

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