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Nokia Snags New Bharti Deal

Light Reading
LR Mobile News Analysis
Light Reading
10/31/2006

India's largest mobile carrier, Bharti Airtel Ltd. (Mumbai: BHARTIARTL), has awarded a $400 million network expansion and managed services contract to Nokia Corp. (NYSE: NOK) as part of its plan to roll out wireless services to rural India. (See Bharti Inks $400M.)

The three year deal covers eight regions of the carrier’s 23-region national network, and builds on earlier agreements between the two companies that had a combined value of $400 million. (See Nokia Wins $125M Bharti Deal and Nokia Expands Bharti.) Bharti has already awarded a new contract for managing its network in the remaining 15 regions to Ericsson AB (Nasdaq: ERIC). (See Ericsson in $1B Bharti Expansion.)

Prudential Equity Group LLC analyst Inder Singh has previously noted Nokia and Ericsson are likely beneficiaries of Bharti’s continued network expansion thanks to their existing relationships with the carrier. (See India's Mad About Mobile .)

In addition to expanding Bharti’s GSM network to all towns and cities in the eight regions, Nokia will deploy WAP gateways across the national network as the carrier looks to boost revenues from content services. Like Ericsson, Nokia will also provide softswitches, helping Bharti piece together a next-generation IP network. (See IBM to Manage SDP for Bharti .)

That Nokia will supply both radio and core network equipment will likely boost margins, which are often put under pressure by India’s low pricing.

According to analysts at Lehman Brothers , Bharti has set aside a $2 billion annual capex budget to build out and upgrade its network to handle India’s fast-paced mobile growth. (See Indian Carrier Capex on the Rise.) The carrier, which reported its second quarter results Friday, had a mobile subscriber base of 27.06 million at the end of September -- up 92 percent from last year and 17 percent from the previous quarter. (See Bharti Profit Rises 79%.)

— Nicole Willing, Reporter, Light Reading

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