AMSTERDAM -- TIP Summit 2019 -- Indian systems integrator Tech Mahindra has been accused of refusing to work with a telecom operator's preferred technology partner because it favored another company in which it has an ownership stake.
The charge comes from Steve Papa, the CEO of Parallel Wireless, who said Tech Mahindra's ownership stake in Altiostar, which competes against his company as a provider of disaggregated radio access network (RAN) technologies, casts doubt on the Indian firm's claims of independence.
Tech Mahindra took a 17.5% stake in Altiostar in January 2018 and participated in a subsequent $114 million funding round in May this year.
"We had a situation where they refused to be the local partners with us. The operator asked them, and they refused because they had invested in Altiostar," he told Light Reading on the sidelines of this week's Telecom Infra Project (TIP) Summit in Amsterdam. "I don't know how badly they have been browbeaten on that and maybe they know not to say it out loud, but there is a real problem."
Papa did not name the service provider or say if Tech Mahindra had eventually backed down, but Mavenir, another company targeting the same market, is known to have identical concerns to the Parallel Wireless boss.
Papa was speaking to Light Reading shortly after Raj Sharma, an associate director of operations at Tech Mahindra, had downplayed worry that systems integrators could supplant giant equipment vendors as overly powerful players in contractual arrangements.
"In this disaggregated world, the systems integrator does not come with a vested interest and tends to be vendor-agnostic," he said during a panel session here. "Yes, it has responsibility for stitching together but comes with a more open mind."
The Indian firm's media relations department did not respond to a Light Reading email asking for a comment on the Parallel Wireless accusations.
Operators are determined to become less reliant on Ericsson, Huawei and Nokia, which dominate the RAN market, and introduce new vendors by using open interfaces and general-purpose equipment. The move has created a big opening for systems integrators, which some telcos are using to support the operational complexity of working with multiple suppliers.
Tech Mahindra has been growing fast, recording a 13% increase in sales last year, to 347.4 billion Indian rupees ($4.8 billion), while traditional kit vendors struggle to lift revenues. "We are encouraged by the revival of the communications business," said CEO Chander Gurnani in a results statement.
The company plays a prominent role in the deployment of an entirely new 4G and 5G network in Japan by ecommerce giant Rakuten. Altiostar's software runs over the remote radio units that Rakuten is building.
Tech Mahindra is not the only systems integrator enjoying an impressive rate of growth. Italy's Reply, which supports Germany's Deutsche Telekom, saw revenues grow 17% last year, to more than €1 billion ($1.1 billion), and hailed the telecom sector as one of its key markets. Its overall sales have more than doubled since 2012.
Everis, a systems integrator owned by Japan's NTT Data, reported a 22% increase in sales, to €1.43 billion ($1.57 billion), for the fiscal year ending in March this year. About 15% of its business is in the telecom sector and it has been working with Spain's Telefónica and Facebook on an open RAN project in Peru, where Parallel Wireless is providing software.
David del Val, Telefónica's CEO of research and development, says Parallel Wireless was chosen because it was the first specialist ready to support a deployment, but Telefónica has subsequently made its own undisclosed investment in Altiostar.
"Altiostar is now majority owned by either a particular complementary vendor or an operator so there is a weird set of incentives there," says Papa.
The ownership situation makes it difficult to work in confidential arrangements, he says. "What information that is appropriate to share is being shared?"
Encouraged by signs of telco interest in building more "disaggregated" networks, systems integrators are now piling into the market. "Two years ago, it would be challenging to get systems integrators to really care. They wouldn't have believed it could happen," says Papa. "Now they believe it. They have got religion and will invest to work things out."
Others dispute whether there will be a long-term need for systems integrators as networks become more heavily automated. "They are running around trying to grab a piece of the market share and I don't see where they fit because we can project manage," says John Baker, the senior vice president of business development at Mavenir. "Unless they are bringing financing, all they are doing is margin stacking and we are trying to take away margin stacking."
- Facebook, Telefónica take OpenRAN 'Live' in Peru, boast 450K subs
- Altiostar Gets Telefónica Investment in Latest Open RAN Boost
- Beware Systems Integrator Lock-In, Open Source Dependency
- The Eye-Watering Cost of Multivendor Networks
- Rakuten Delays Launch of Cloud-Native Network
— Iain Morris, International Editor, Light Reading