Key contracts: Operator-vendor partnerships on the rise

Trends and Developments, March 30, 2012

In the wake of the 2G controversy and the resultant uncertainty, the country’s telecom sector remained subdued over the past year. Only a handful of managed services contracts and equipment deals were finalised in 2011. Most operators, not surprisingly, were hesitant to enter into any major partnerships.

However, 2012 seems to have started on a better note. Just two months into the year and operators have already entered into partnerships with leading equipment vendors. These agreements are of a diverse nature and include managed services deals, equipment procurement contracts as well as pacts for network rollout and network management for long term evolution time-division duplex (LTE-TDD) technology.

According to analysts, with the Supreme Court cancelling the 122 contentious licences awarded in 2008, the industry is now headed towards stability. With the revised National Telecom Policy expected to be announced in April 2012, the sector expects greater clarity on the policy and regulatory fronts going forward.

Further, with broadband wireless access (BWA) services due to be launched later this year, the telecom space is likely to witness several LTE-TDD rollout and management contracts in the coming months. takes stock of the key deals signed during the last six months...

Bharat Sanchar Nigam Limited

After several delays, Bharat Sanchar Nigam Limited (BSNL) finally completed the process of selecting vendors for the procurement of GSM lines in February 2012. In July 2011, BSNL had floated a tender for planning, financing, engineering, supply, installation, testing, commissioning and annual maintenance of 14.37 million lines on its GSM/UMTS/LTE-based cellular mobile network (under Phase VII expansion) in the country’s north, east and south zones. However, following concerns over the procurement procedures, the tender had to be suspended twice. Bids for the tender were finally invited in December 2011. The contract aimed at boosting the operator’s network capacity and its estimated value was between $710 million and $1.2 billion.


Madhya Pradesh and Chhattisgarh. Ericsson India is to manage and maintain Bharti Airtel’s mobile networks in 15 circles. BSNL had also invited bids for the procurement of intelligent network equipment from vendors. 2/5 . This development follows the operator’s renewal of its managed services contract with Ericsson India towards end-2011. Under the five-year contract. Himachal Pradesh. Bharti Airtel selected NSN to build and operate its LTE-TDD network in Maharashtra. NSN will provide its LTE-TDD 6 pipes radio solution and use its global network solutions centre. Airtel will source its LTE-TDD equipment from ZTE during the first phase of deployment. While this is the first ever BWA deal that has been announced formally by Bharti Airtel. Further. ZTE is set to supply equipment to two zones and Huawei to one. However. followed by ZTE. Gujarat. to remotely deliver services for efficient network performance. March 30. Maharashtra and Goa. namely Mumbai. ZTE and Huawei emerged as the lowest bidders. Of the three zones for which the contracts are awarded. Jammu and Kashmir. and supply end-user data devices that can provide data speeds of up to 100 Mbps. located at Noida. maintenance activities for its 2G and 3G sites. As per the agreement. NSN will continue managing the operator’s 2G and 3G networks in these circles for the next five years. Kolkata. NSN will roll out the LTE-TDD network for Airtel. Ericsson India. Bharti Airtel has also renewed its managed services contract with NSN in eight of its circles. Alcatel-Lucent emerged as the lowest bidder in this category. Idea Cellular Idea Cellular has recently extended its managed services agreement with Ericsson India from one circle to five circles. Orissa and West Bengal.Key contracts: Operator-vendor partnerships on the rise Trends and Developments. Ericsson India will be responsible for managing Idea’s network and field operations. Huawei Technologies and ZTE had submitted their bids. Bharti Airtel Recently. As per the agreement. The contract value is estimated at $300 million. Meanwhile. the Northeast and Assam. the operator has reportedly already awarded a 4G contract to ZTE in the Kolkata circle. Nokia Siemens Networks (NSN). 2012 Leading telecom equipment manufacturers including Alcatel-Lucent. Under the three-year agreement. namely Bihar and Jharkhand. Under the contract. Mumbai.

Tulip Telecom secured four large network and data centre orders with a collective value of about Rs 2 billion. As part of the agreement.8 million from the Rajasthan government. The deal has provided Augere with an end-to-end LTE-TDD solution as well as managed services in 14 cities in the Madhya Pradesh circle. about 70 Idea employees will join Ericsson India. In December 2011. a five-year project worth Rs 247. While the modem users would be considered SSTL subscribers. Augere selected Ericsson India to manage its LTE network in the country. a subsidiary of Kavveri Telecom. Tata Teleservices Limited signed a 10-year agreement with Kavveri Telecom Infrastructure.8 million in Bihar under the Restructured Accelerated Power Development Reforms Programme. and improving network performance for the operator’s infrastructure. March 30. As per the agreement. During the same month. which run on SSTL’s network. These included a three-year order worth Rs 488. to use in-building wireless solutions for improving the its network coverage. Other deals Vodafone India signed an agreement with Sistema Shyam TeleServices Limited (SSTL) to sell its modems under the NetCruise brand. where it won the BWA licence in 2010. they would be billed by Vodafone India. Ericsson’s global service centre in the country will play a key role in managing Idea’s network. a Rs 500 million connectivity order from Sahara’s Parabanking division. as part of the central government-funded Rajasthan State Crime and Criminal Tracking Network and Systems project.Key contracts: Operator-vendor partnerships on the rise Trends and Developments. Partnerships in the pipeline 3/5 . Augere In October 2011. 2012 network design and planning. and another five-year data centre order worth Rs 750 million for the new Bengaluru-based facility of a large global telecom major. the operators will share the revenue from this service. The company has planned an investment of $50 million-$60 million for its BWA rollout in the country.

Huawei and NSN. ZTE and Huawei to manage its mobile phone networks and is likely to finalise the deal by mid-April 2012. Meanwhile. when finalised. would be NSN’s second outsourcing deal in 2012. Currently. Kolkata. 2012 Reliance Communications (RCOM) is in talks with vendors regarding a $3 billion network management contract. RCOM’s networks are managed by Alcatel-Lucent. Haryana. a majority of the players whose licences have been revoked will either cancel or defer their expansion plans. which is largely dominated by Ericsson. other incumbent players would be looking at making good their investment in the 3G and BWA licences. Samsung is reportedly in talks with one of the leading service providers in the country to sign an LTE TDD contract and expects to conclude the negotiations with the operator in the first half of 2012. Ericsson. Private operators like Bharti Airtel and Vodafone India have outsourced almost all their non-core activities. as the plan is to offer broadband services by the end of 4/5 . Punjab. The deal.Key contracts: Operator-vendor partnerships on the rise Trends and Developments. Going forward Following the Supreme Court verdict. However. The proposed deal for network management would bring about a 20 per cent reduction in RCOM’s operational costs as a large number of the operator’s employees would be moved to the vendor that wins the contract. and the operator’s 3G networks in three of these service areas. NSN is already managing and maintaining Aircel’s networks in seven circles – Delhi. Mumbai. However. Samsung Electronics is also planning a foray into the 4G equipment market. the expenditure on the maintenance of the towers accounts for almost 30 per cent of BSNL’s total spending. including network and IT management. In a move to improve its financial health. In particular. IBM and Wipro in order to keep operational costs as low as possible. Alcatel-Lucent. the BWA space will witness network rollouts this year. The operator has approached Ericsson India. The public sector undertaking is now looking at outsourcing the operations and maintenance of its telecom towers and is likely to take concrete steps in this regard by end-March 2012. the operator may consider exiting the venture if Alcatel-Lucent does not win the new contract. BSNL has also decided to follow the outsourcing model adopted by private sector operators. At present. March 30. West Bengal and Rajasthan. to companies such as NSN. They are likely to go ahead with their network expansion and upgradation plans. after its recent $300 million agreement with Bharti Airtel. Aircel is also close to renewing its $100 million outsourcing deal with NSN to manage its mobile networks. Alcatel-Lucent.

Key contracts: Operator-vendor partnerships on the rise Trends and All Rights Reserved 5/5 . March 30. Going forward. About Us Subscribe We are Hiring Privacy Policy Contact Us Advertise Terms & Conditions Copyright © 2010. it would be interesting to see how the year unfolds for operator-vendor 2012 2012. tele.

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