Siemens to share telecom revenue

Siemens to be paid for equipment in parts based on growth of subcribers on customers' networks.

German telecommunication equipment giant Siemens AG is trying a unique business model in India that is based on revenue share with its customer, typically a mobile or fixed-line service provider.

Under the new model, not tried anywhere before, Siemens will be paid for its equipment in installments as the number of subscribers on the customer's network grows.

Until now, Siemens has been taking payments upfront for its equipment. Outside India, the company will continue to follow this model.

"We will grow with our customers. Our profit and revenue stream will be directly linked to the customer," said Thomas Ganswindt, Siemens executive vice-president and member of its corporate executive committee in Germany, who was here last week to negotiate deals.

Global telecom equipment makers are focusing on India as local service providers are placing some of the largest orders for telecom equipment in the world.

Siemens, which has a manufacturing operation in Kolkata, will also beef up the facility as it vies for the mega tender of 45 million lines floated by Bharat Sanchar Nigam Ltd.

Siemens was a leader in the Indian market a few years ago but has slipped, with some very lucrative deals in recent times going to Nokia and Ericsson.

"We lost a little bit of attention regarding new developments. Sometimes success can make you blind," admitted Ganswindt. He expressed the hope that the renewed focus will help the company regain leadership in the Indian market in three years.

The company is hoping that the third generation of mobile networks, in whose equipment it is a world leader, will help its cause in India.

India is bracing up for the 3G technology, which enables high-speed data transfer on mobile networks.

Another business that Siemens is looking to tap in India is Internet protocol television, or IPTV, which offers a host of entertainment solutions delivered on normal television sets through broadband Internet.

Siemens is in talks with a bunch of telecommunication service providers in India to start the service.