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Chinese firms to bag half of deals in India's telecom market
By siliconindia
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Wednesday, 10 September 2008, 16:27 IST
New Delhi: Though India is all set to overtake China as the world's largest mobile telecom equipment market with service providers planning to place orders worth $15-20 billion over the next 24 months, it is Chinese equipment suppliers that are expected to bag 50 percent of the deals from this market, reported Business Standard.
The Chinese entry into Indian market with a comparatively lower price tag will replace traditional dominance of European companies like Ericsson, Alcatel and Nokia-Siemens as they control over 75 percent of the India's telecom equipment market. Industry estimates indicate that Chinese companies like Huawei and ZTE can supply equipment 10-15 percent cheaper and are expected to bag nearly half the new orders. Indian players are still a far cry from this pie.
However, TV Ramachandran, director general of the Cellular Operators Association of India, which represents GSM operators, says, "India is growing faster than China. Given the 2010 target of over 500-550 million mobile customers, the industry will buy nearly $16-20 billion worth of equipment. By 2012, the market will be $30 billion."
On a base of 580 million mobile customers, China is adding five-six million subscribers every month. In contrast, India, which is close to hitting the 300-million mark, is expected to add 9-10 million new subscribers every month for the next two to three years. Moreover, China has still not opened up to 3G services.
Huawei has already bagged a $1.3-billion order from Reliance Communications for its pan-India GSM network and a $500-million order from Aircel for a similar rollout. Meanwhile, Sistema-Shyam is close to negotiating its pan-Indian CDMA equipment requirement with Huawei and ZTE, which are likely to divide the order among themselves. Industry estimates that equipment orders for 3G alone will be over $5 billion.
A senior executive of one of the new players which placed an order on a Chinese company says, "The reasons are simple. Top European equipment vendors are closely associated with big incumbent mobile players in the country with whom they have long-term contracts. They have assured them that they will not work with others, especially the new players. The Chinese are ready to supply us at cheaper cost, so we will go with them."
However, European companies say that the Chinese aggression might not last too long. "They might play on price, but telcos are looking for quality and service, which are their weak points. We will never sell our products below cost as we have an established market already and long-term relationships," said a senior executive of a leading European equipment company.
