European telecom equipment vendors Ericsson and Nokia are seeking to secure 4G and 5G business from Vodafone Idea, not only in circles where they provide services but also where 4G technology has been deployed by Chinese companies Huawei and ZTE, executives and analysts said.
The European companies, however, will face competition from US vendor Mavenir and South Korea’s Samsung, which have been running pilot projects of OpenRAN and vRAN technologies, respectively, in some circles, they added.
Finland’s Nokia powers Vodafone Idea’s 4G in nine circles, while Swedish vendor Ericsson does so in eight circles. Huawei and ZTE tech are in place in seven and five circles, respectively. All ZTE circles are shared with other vendors.
Huawei is a vendor in premium zones including Delhi and Chennai, whereas it shares the Tamil Nadu circle with Nokia, which is present in the premium Mumbai and Kolkata circles.
“Nokia and Ericsson are looking at securing business in circles where Chinese vendors deployed 4G in addition to their existing circles. Under the trusted telecom sources regime, Chinese vendors can’t provide any technology for new capacity or coverage since they haven’t secured trusted source status,” a senior executive told Moneycontrol.
Another executive familiar with the discussions between vendors and Vodafone Idea said both Mavenir and Samsung are trying hard to secure business from the telco, especially in circles with 4G from Huawei and ZTE.
“Vodafone Idea is currently working on its strategy on vendor selection for circles with Chinese vendors,” the executive said.
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However, Huawei and ZTE could still see some business coming their way in the form of maintenance and upgrades in line with rules defined by the National Cyber Security Coordinator (NCSC).
“While new 4G and 5G business is unlikely, Vodafone Idea could reach out to Huawei and ZTE for maintenance and capacity upgradation of existing sites if allowed by the NCSC, although this will be minuscule as compared to business which European, US and Korean vendors are aiming for,” a senior executive working with a Chinese vendor said on condition of anonymity.
Queries sent to Vodafone Idea, Nokia, Mavenir and Samsung didn't elicit any response.
"We do not comment on business discussions with our customers," an Ericsson India spokesperson said.
Ashwinder Sethi, principal at Analysys Mason, told Moneycontrol that Chinese vendors can only replace the existing network (card/software upgrade) and maintain the network but not do incremental rollout for operators.
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Sethi said OpenRAN players, especially Mavenir, will have limited play in India because the technology is still nascent and has not yet seen mass deployment in India or globally.
“This means that Nokia and Ericsson as well as Samsung will have a big opportunity to address in the coming months,” he said.
Vodafone Idea currently has about 180,000 4G sites compared with 300,000 4G sites with both Reliance Jio and Airtel, as per Analysys Mason estimates.
New orders likely soon
Vendors expect Vodafone Idea to place new purchase orders for 4G expansion and 5G rollout within the next two months, sources said.
They said the telco’s 5G investments are expected to be focused on deploying the non-standalone architecture (NSA) – adopted by Bharti Airtel – as it requires less capex than the superior standalone (SA) architecture, which Reliance Jio has adopted.
Vodafone Idea intends to cover 40 percent of its revenue base with its 5G services in the next 24-30 months and expects to roll out 5G services in select pockets within 6-9 months, having completed the 5G minimum rollout obligation in four circles.
Chief executive officer Akshay Moondra recently told Moneycontrol that the company’s “top-most priority” focus is to match 4G coverage with its rival to arrest subscriber churn. He highlighted that 5G was not the reason for the loss of subscribers.
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The telco, which recently concluded an Rs 18,000 crore follow-on public offer, will utilise about Rs 12,750 crore to purchase equipment for expanding its 4G network and rolling out 5G. It has earmarked Rs 5,720 crore for setting up its 5G network.
Vodafone Idea still owes a significant amount of money to Nokia and Ericsson. As a result, these vendors may seek changes in payment terms in new contracts to ensure their funds are not delayed.
Read More: Vodafone Idea priority is to settle vendors dues gradually, but no 'one-shot' clearance: CEO
Moondra last month clarified that the proceeds from the follow-on public offer are meant for growth capex and will not be used to clear vendor dues.
“Vendor dues have to be cleared out of internal accruals,” he told Moneycontrol on April 17.
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