As Vodafone Idea updates its network, Ericsson and Nokia want to displace its Chinese competitors

As Vodafone Idea updates its network, Ericsson and Nokia want to displace its Chinese competitors

The American vendor Mavenir and the South Korean company Samsung, which have been conducting OpenRAN and vRAN technology trials in certain areas, respectively, may provide some competition for the European suppliers Nokia and Ericsson.

According to executives and experts, European telecom equipment suppliers Ericsson and Nokia are vying for business from Vodafone Idea, not only in the areas where they provide services but also in areas where Chinese businesses Huawei and ZTE have implemented 4G technology.

However, they noted that the US vendor Mavenir and the South Korean company Samsung, who have been conducting OpenRAN and vRAN technology trial projects in several circles, will compete with the European enterprises.

Eight circles are served by Swedish vendor Ericsson, while nine circles are served by Finland's Nokia, which provides 4G for Vodafone Idea. ZTE and Huawei technologies are implemented in five and seven circles, respectively. ZTE circles are all shared by other suppliers.

While Nokia is present in the upscale Mumbai and Kolkata circles, Huawei is a vendor in premium zones like Delhi and Chennai. The two companies share the Tamil Nadu circle.

"In addition to their current circles, Nokia and Ericsson are considering obtaining business in circles where Chinese suppliers have built 4G. Chinese suppliers are unable to provide any technology for additional capacity or coverage under the trusted telecom sources regime since they have not obtained trusted source status, a top executive told Moneycontrol.

According to an additional executive who is aware of the conversations between vendors and Vodafone Idea, Mavenir and Samsung are making a concerted effort to win over the telco's business, particularly in areas where Huawei and ZTE are providing 4G service.

The CEO said, "Vodafone Idea is currently working on its strategy on vendor selection for circles with Chinese vendors."

Notwithstanding, Huawei and ZTE may still be able to benefit from maintenance and updates in accordance with guidelines established by the National Cyber Security Coordinator (NCSC).

"A senior executive working with a Chinese vendor stated, on condition of anonymity, that while new 4G and 5G business is unlikely, Vodafone Idea could reach out to Huawei and ZTE for the upkeep and capacity upgradation of existing sites if permitted by the NCSC. Although this will be insignificant as compared to business which European, US, and Korean vendors are aiming for."

No one responded to inquiries addressed to Samsung, Mavenir, Vodafone Idea, Nokia, or Mavenir.

"We don't comment on business matters with our clients," a representative for Ericsson India said.

Chinese suppliers are limited to replacing the current network (card/software update) and maintaining the network; they are unable to provide incremental rollout for operators, according to Ashwinder Sethi, partner at Analysys Mason, who spoke with Moneycontrol.

According to Sethi, the technology is still in its infancy and has not yet seen widespread deployment in India or throughout the world, thus OpenRAN players—particularly Mavenir—will have little influence in the country.

"This implies that in the upcoming months, Samsung, Nokia, and Ericsson will have a significant opportunity to address," he said.

According to Analysys Mason estimates, Vodafone Idea now has roughly 180,000 4G sites, compared with 300,000 4G sites with both Reliance Jio and Airtel.

Probably soon, new orders

Within the next two months, vendors anticipate Vodafone Idea to place additional purchase orders for the launch of 5G and 4G growth, according to sources.

According to them, the telco's 5G efforts would likely be concentrated on implementing Bharti Airtel's non-standalone architecture (NSA), which needs less capital expenditure than Reliance Jio's better standalone (SA) design.

After completing the five-year minimum rollout commitment in four circles, Vodafone Idea plans to use its 5G services to cover forty percent of its revenue base during the next 24 to 30 months. The company also anticipates rolling out 5G services in a few chosen pockets within the next six to nine months.

CEO Akshay Moondra recently said to Moneycontrol that matching rival's 4G coverage is the company's "top-most priority" goal in an effort to reduce user churn. He emphasized that the decline in subscriptions was not caused by 5G.

The telecom company would use around Rs 12,750 crore to buy equipment for growing its 4G network and launching 5G. It recently wrapped off a Rs 18,000 crore follow-on public offer. For the establishment of its 5G network, Rs 5,720 crore has been set aside.

Vodafone Idea still owes Ericsson and Nokia a substantial sum of money. To make sure their money isn't delayed, these suppliers could thus ask for modifications to the conditions of payment in new agreements.

Moondra made it clear last month that expansion capital expenditures would be funded by the proceeds of the follow-on public offering and that vendor debt will not be settled with them.

"It is necessary to remove vendor dues from internal accruals," he informed Moneycontrol on April 17.