Tele equipment makers vie for mkt share post 3G, BWA

Written by Rachana Khanzode | Mumbai | Updated: Jul 9 2010, 07:01am hrs
Telecom equipment providers like Nokia Siemens Networks (NSN), Ericsson, ZTE, Motorola, Huawei and Alcatel Lucent are now engaged in a fierce competition in the already low-margin Indian telecom market in a bid to grab a pie of large contracts following roll out of 3G and BWA. With the recent allotment of the BWA spectrum to four major operators Mukesh Ambani-owned Infotel, Aircel, Bharti Airtel and Tikona Digital the industry is expected to move fast to launch their services.

At the same time, the service operators intend to minimise their costs after they indulged in fierce bidding for the 3G spectrum licences in the recently concluded auctions.

Cost of per 3G base transceiver station (BTS) could go anywhere between $12,000 and $20,000, depending on the terms and conditions that are involved in the contract. However, we are expecting the operators to decide by July on these factors, said an industry watcher, who is closely monitoring these activities.

Considering the maximum number of circles with a telecom operator are 13, analysts say capex plans for 3G roll-out would depend on the individual strategy of operators. However, for pan-India BWA roll-out at a spend of about Rs 1,800-2,000 per subscriber, an operator would need to spend anywhere between Rs 10,000 and Rs 12,000 crore. Similar spending requirements could also be a case in 3G roll out. However, this would depend largely on the circle and subscriber base that the operator is able to attract.

Equipment and the service providers are tight-lipped on the expected size of these contracts, as they intend to explore various models to improve margins, like a combined contract for equipment and managed services. Girish Kadam, VP of services sales for India at Ericsson, said, As service providers are increasingly looking at combined contracts for equipment and managed services, it gives us a better opportunity in the Indian market.

Operators are also looking at the revenue sharing model, which have already been adopted by certain players, for their large contracts. Under these, a service provider is better placed in terms of buying the equipment as it links the demand directly with the subscriber base.

Indian operators are also opening up to the multi-vendor strategy now. Kanika Atri, head, marketing and communications, India region, Nokia Siemens Networks, said, We see the emergence of multi-vendor managed services, where a single MS partner is responsible for equipment from multiple vendors. This is due to the increase in mobile data traffic, smart devices and introduction of 3G.