Huawei close to $600 mn deals in India

Huawei Technologies, a Chinese telecom equipment vendor, is close to bagging $400-600 million (Rs 1,600-2,400 crore) network outsourcing contracts from service providers in the country. The company is in advanced stages of negotiations with four cellular operators and is expected to announce a couple of deals soon.

According to sources close to the development, Huawei is in advanced stages of negotiations with stated-owned telecom companies Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL), besides Vodafone-Essar. The company is also in talks with Bharti Airtel for a similar contract.

Huawei Chairperson Sun Yafang visited India last week and met key executives of telecom companies, including Reliance Communications Chairman Anil Ambani. Reliance has awarded a $200 million (Rs 800 crore) network expansion contract to the company.

Huawei is confident of signing at least three deals and going by the Reliance Communications deal, the industry analysts peg individual deal sizes at around $200-300 million. This means even if the company wins two deals, it will get around $400 at the lower end. On the higher end, the total deal size can go up to $600-800 million.

Bitten by the outsourcing bug, domestic telecom service providers are looking at outsourcing their network expansion and management services to equipment vendors. This will enable them to focus on adding subscribers and improving the quality of services.

Prior to the Huawei-Reliance Communications deal, the Anil Ambani group had signed a $400 million (Rs 1,600 crore) network integration services contract with Nasdaq-listed Alcatel-Lucent.

Idea Cellular, an Aditya Birla group company, has awarded a Rs 220-crore ($53 million) contract to IBM, the world's largest computer services provider, to deploy and maintain interactive voice response (IVR) system. Earlier, Nokia Siemens Networks, a joint venture between Nokia and Siemens, had bagged a $900 million (Rs 3,690 crore) deal from Bharti Airtel for the expansion of the latter's wireless and fixed line services.

In February 2004, Bharti had signed a $400 million deal with Swedish equipment vendor Ericsson to build and manage networks across 13 circles, which was followed by a $250 million deal in June 2005. Then in August 2006, the Sunil Mittal company had signed a $1 billion network expansion deal with Ericsson, the biggest so far in the domestic telecom sector.