India’s telecommunications agency places order for equipment and services with Ericsson, says another contract is going to Nokia…
“Swedish telecom equipment giant Ericsson solidified its dominance of the key Indian mobile market Friday with a US$1.3 billion deal to provide equipment and services to the country’s largest wireless carrier.”
New Delhi — India’s government-run mobile carrier, Bharat Sanchar Nigam Ltd., has awarded Swedish equipment major Ericsson with a $1.3 billion contract to supply GSM (Global System for Mobile communications) and W-CDMA/HSPA (Wideband Code Division Multiple Access/High-Speed Packet Access) equipment and related telecom services.
The deal calls for Ericsson to upgrade the existing GSM network and to start introducing next-generation functionality on the W-CDMA/HSPA standard. The contract also calls for the first deliveries to be made next month and for the first phase of the work to be completed within a year, Ericsson said.
“Upgrading our network will pave the way for a premium communications experience for our customers, and enable us to address new customer segments cost-efficiently,” said Kuldeep Goyal, Bharat Sanchar Nigam’s Chairman and Managing Director.
“This will give a big boost to our mobile plans, which was constrained due to capacity,” Goyal said.
Wideband code division multiple access and high-speed packet access are third-generation mobile network standards that support multimedia services in addition to voice.
“This contract represents a milestone…” The contract includes an order to lay 13.1 million GSM lines, Goyal told reporters at a separate press conference in New Delhi.
Ericsson said in a statement that the contract is worth $1.3 billion and would help it strengthen its position in India, where it has a market share of about 40 percent of connected subscribers.
Goyal said another order for almost 10 million lines was being sent to Nokia.
“The letter of intent for almost 10 million lines will be placed with Nokia shortly,” Goyal said.
A spokeswoman at Nokia Siemens Networks confirmed the company is in discussions, but declined to give more information.
Ericsson will start deliveries in October 2007, with the first phase of the project set to be completed in 12 months.
Ericsson India President Mats Granryd called the deal a “landmark project” for both the country and the company, and said the deal further cements the company’s long-term relationship with BSNL and is set to be a “catalyst for future telecom growth in the dynamic Indian market.”
Ericsson has benefited from India’s push to modernize its communications networks more than the other major telecom gear makers.
The company has supplied equipment to 49 of the 96 existing GSM mobile networks in the country, it said, adding that its switches and other mobile gear handles the calls and other services of about 40 percent of the country’s wireless subscribers.
“The deal gives Ericsson a stronger grip on the booming Indian market.”
“The Indian market is tremendously exciting, growing by six million subscribers a month. The industry is expected to grow to 500 million in 2010 from 160 million wireless users now,” he said.
He said since the 3G policy has yet to be announced, he estimates a spectrum to be allocated this year, and to be up and running by mid-2008.
“Granryd declined to elaborate on other deals being discussed.”
“By landing the majority of the outstanding BSNL contract…Ericsson builds the foundation for very substantial revenue growth,” said Dresdner Kleinwort telecom analyst Per Lindberg in a research note.
The deal calls for Ericsson to supply a range of its products and services, including its Mobile Softswitch Solution and its service-aware Packet Core, IMS (IP Multimedia Subsystem) and multi-service IP Packet Backbone networks. It will also help design the networks and assist with deployment, integration and training.
Ericsson has played a large role in spreading the mobile revolution in the country.
India is the world’s fastest-growing mobile market. Operators signed up more than 8 million subscribers in July, taking total user numbers to nearly 193 million.
BSNL, which dominates the fixed-line market in India with 32.7 million subscribers, has a 229 billion rupees ($5.6 billion) expansion plan for the year ending March 2008. Market leader Bharti Airtel had 44.8 million mobile subscribers.
Much like China, India is a “large country with tens of millions of people living in rural areas that can best be served by wireless networks,” said Shailendra Pandey, ABI Research analyst. “This represents a massive market opportunity for Ericsson and its competitors for years to come. Ericsson has managed to carve itself a nice niche there.”
Goyal also said that BSNL would soon introduce internet telephony services which would allow broadband users to call abroad for Re 1 per minute.
“We have already asked for the expression of interest (EoI) for Voice over Internet Protocol (VoIP). We will shortlist and tie up with players who can offer us technical support to offer these services within the next two months, and hope to launch internet telephony within the next four months,” he said.
He also said that the PSU would ‘soon’ float a tender for WiMax while adding that the company was all geared up to offer IPTV services in major cities such as Pune, Kolkata and Bangalore. With regard to broadband, Goyal said the company would add around two million broadband connections this fiscal.