Huawei Touts $2B Deal From BSNL

Huawei Technologies Co. Ltd. has been awarded a $2 billion mobile network equipment deal by India's state-owned operator Bharat Sanchar Nigam Ltd. (BSNL) , a spokesman for the vendor tells Light Reading.

The deal, first hinted at last week, is for the provision of equipment in the south of India, one of the four regional zones in which BSNL is awarding hefty network expansion contracts. Huawei says it's still hopeful it will land deals in other regions. (See $6B Wireless Winners.)

That's despite reports that Huawei's bids in the east and west of the country have been blocked by a government security panel comprising representatives from the country's Intelligence Bureau and Ministry of Defense. See this Economic Times report for more details.

But the Chinese vendor says it's oblivious to any security concerns. "We have seen the Economic Times article, and we can say that we are not aware of any discussions by any Indian government agencies regarding our company or our operations in India," says the Huawei spokesman.

Uncertainty over the involvement of the Chinese vendor in BSNL's network developments has been long standing, and stems primarily from the assertion that the Chinese government has influence over the management of Huawei.

"This allegation is untrue and totally without foundation. We are a company that is 100 percent owned by its employees. No government agency, company, or any other party holds shares or exercises any control over our company," says the spokesman.

So, where have these rumors come from?

"Huawei is growing and expanding its footprint in India. I guess we're seeing manifestations of corporate warfare unleashed by our competitors," he adds. "Huawei has great respect for Indian security agencies and has been in India for well over a decade, having both commercial operations as well as an R&D center, thus fully complying with all Indian laws and regulations."

If Huawei's involvement in BSNL's $6 billion expansion is limited to the south, though, Ericsson AB (Nasdaq: ERIC) is the most likely beneficiary as local reports suggest the Swedish giant is the only vendor besides Huawei to be on the operator's shortlist. Ericsson was unable to confirm whether or not it had been awarded any new deals by BSNL when contacted by Light Reading.

But the BSNL deals might, ultimately, not be restricted to just two main suppliers. Another Economic Times report suggests the possibility that Alcatel-Lucent (NYSE: ALU) might still land some of the action, while Nokia Networks has broken cover to, unusually, comment on the ongoing speculation, saying it hasn't heard anything from BSNL to suggest it is out of the running.

Other Indian mobile network deals
The BSNL tender may be the biggest, but it is not the only contract issued recently in India's wireless market -- and Chinese vendors feature strongly in the others too.

New entrant Unitech Wireless, in which Telenor Group (Nasdaq: TELN) owns a 67 percent share, has awarded contracts to Huawei and AlcaLu, which is supplying technology for rollout in the Kerala and Orissa circles. (See Unitech Picks AlcaLu.)

Huawei says its deal is a five-year, $400 million agreement to supply base station gear for Unitech's nationwide rollout, and further support network infrastructure in three circles in the south -- Tamil Nadu, Karnataka, and Andhra Pradesh. (See A Guide to India's Telecom Market.)

Meanwhile, fellow startup operator Sistema Shyam TeleServices Ltd. has awarded a seven-year deal to China’s ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) for the provision of wireless access and core network infrastructure. The CDMA operator plans to complete its nationwide rollout by the third quarter of 2010.

Sistema has licenses and spectrum to operate in all of India's 22 telecoms circles and has so far launched services in three -- Rajasthan, Tamil Nadu, and Kerala.

— Catherine Haslam, Asia Editor, Light Reading

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