Anil Ambani-owned Reliance Communications Ltd (RCOM) has signed a multi-year end-to-end network managed services contract with Alcatel-Lucent. The $1 billion contract runs up to 2020.
Currently, RCom has a 33:67 joint venture (JV) with Alcatel-Lucent, which was announced in 2008 for managed services for wireless. The new contract, though covers only Eastern and Southern India, would cover the entire range of RCOM's telecom services — wireless, wire-line, and utilities — on an end-to-end basis across the country. This is different from managed service contracts deals signed by other telecom companies, where the deals would be restricted only to the company’s wireless operations.
The network outsourcing contract will cut costs for India's No 3 carrier, where 4,000 - or about 15% - of its employees will move to Alcatel-Lucent as part of the deal, Gurdeep Singh, Chief Executive of Reliance Communications' wireless business, told reporters on Wednesday.
Most leading Indian telecommunication carriers have outsourced the management of their networks to firms including Ericsson, Nokia Siemens Networks and Chinese firms Huawei Technologies Co Ltd and ZTE Corp as they try to lower their costs.
Alcatel and Reliance Communications formed in 2008 a joint venture which was managing the Indian firm's network in a five-year, $750 million deal. That joint venture will end after the award of the new contract, Singh said.
The contract would entail outsourcing end-to-end management services, including operational planning of the network (which most companies keep to themselves), management and maintenance of GSM, CDMA and wireline networks, fibre, utilities, internet protocol and field assurance (quality control).
Reliance Communications, controlled by billionaire Anil Ambani, had 134 million Indian mobile phone customers as of November, according to data from the sector regulator, ranking third in a market of nearly 900 million mobile users.
The deal is also a boost for loss-making Alcatel-Lucent, which has been hit by competition from low-cost Chinese rivals and lower spending on network gear by global telecoms operators.
