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

haojie_zhao 12/5/2012 | 4:37:45 PM
re: India Watch: Vendor Lockdown It seems rather crazy,but anything may happen,especially when politic be the first consideration.
desiEngineer 12/5/2012 | 4:37:45 PM
re: India Watch: Vendor Lockdown

I tried it.  You have to get two copies of your passport photos, bring your passport, driver's license or other proof of residence, fill out a form, stand in something that resembles a line, and deal with frustrated clerks (the customers can be pretty rude and the clerks can be rude right back).  That was the one provider's store.

The next operator I went to - the store opened at 10am.  Once they showed up and had their cup of tea, they were extremely helpful, but the same issues of paperwork stymied me.

Q: How do you get 455 people getting mobile phones per minute (it's more like 1500/min if you consider an average working day with the shortened week and gazillion holidays)?

A: Population 1.2 billion and counting...



Gagandeep Kaur 12/5/2012 | 4:37:44 PM
re: India Watch: Vendor Lockdown Yup...this is clearly a dumb and silly move. The Chinese vendors in India (ZTE and Huawei) have been crying hoarse that there is a campaign against them because they have been able to grab the marketshare from other vendors. Operators have in the past protested move to ban the Chinese equipment. most of the operators say "off the record" that it wouldn't have been possible to have telecom revolution in India if the equipment prices hadnt come down and equipment prices came down because of Chinese vendors...the ban is likely to be lifted soon...it would be extremely difficult for the Government to implement this for long...
belikejones 12/5/2012 | 4:37:44 PM
re: India Watch: Vendor Lockdown

If this policy exists due to security concerns regarding chinese firms, it has been incredibly badly formulated and executed. For starters, it affects purchases from ALL companies around the world. Do the bureaucrats in India really think that having stopped all shipments of telecom equipment into the country since December 2009 is a good thing? Right now the only reason anyone gives a sh*t about India is because of its telecom market. Kill the golden goose and there are plenty of other good places to do business in the world. This wasn't a smart move. This was dumb and bad for business in India. Smart is when you have a policy where you come out ahead. What they need to do asap is open it back up and do a surgeon's job on this instead of a butcher's job. Figure out precisely what you need to accomplish, and get it done without putting the entire country on "hold".

nodeb 12/5/2012 | 4:37:43 PM
re: India Watch: Vendor Lockdown

Interesting...politicians again!'Security concerns'-so where are the evidences? I know Huawei has roughly about 4000-5000 India staff and recenly said it will invest another 500 million USD over there. Well, looks like there won't be only one casualty!

Gagandeep Kaur 12/5/2012 | 4:37:43 PM
re: India Watch: Vendor Lockdown You have certainly had a bad experience but frankly the easiest thing to get in India is a mobile connection...compare it with ration card, election card etc etc.
shygye75 12/5/2012 | 4:37:41 PM
re: India Watch: Vendor Lockdown Another reminder that technology is global, but markets are local.
Gagandeep Kaur 12/5/2012 | 4:37:41 PM
re: India Watch: Vendor Lockdown The Chinese players sure claim that it is a lobby of the "European" players...the operators lobby will certainly fight this...
rajiv_sharma 12/5/2012 | 4:37:41 PM
re: India Watch: Vendor Lockdown

What a poor decision by indian govt. Huawei entered in indian market and changed the industry dynamics, it has been fastest growing company and giving NSN and Ericsson very tough time. Both are trying hard to push back Huawei in indian market for last couple of years and if rumours are to be belived this is because of lobby of ericsson and nsn

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