Recent media reports indicate that Finnish telecom equipment giant Nokia may be in talks to replace Huawei's 4G radio gear in Vodafone Idea's networks in India. If this happens, this would see Nokia deploying 12,000 5G-ready radio sites and 4,000 small cells in Vodafone Idea's network in one of the largest swap deals for the company.
This is a significant deal for Nokia at the cost of Huawei. Unfortunately, there might be more such deals in the offing as Indian telcos try to reduce their dependency on the Chinese vendors.
Chinese vendor Huawei has been facing rough weather in India. The company was barred from participating in the 5G trials and has not been able to get the tag of the trusted vendor as part of the National Security Directive (NSD) for acquiring new telecom gear. As per the recent change in rules, the Indian telcos can now award business to vendors and equipment, which gets the Trusted Vendor approval from the government.
India also barred the state-owned Bharat Sanchar Nigam Limited (BSNL) from procuring gear from Chinese vendors. All this means that it is tough for the company to get new business in India.
Small deals help Huawei to survive in India
At the same time, it is not all gloom and doom for the Chinese vendors as the Indian telcos continue to award contracts to Huawei, which they are able to do in the new regulations. For instance, as per media reports, Bharti Airtel, India's second-largest service provider, recently awarded a $19.59 million (1500 million Indian rupees) expansion contract to Huawei. As part of the deal, Huawei would be helping Airtel in upgrading and expanding its National Long Distance (NLD) network. The company had awarded a similar contract to Huawei last year in 2021 as well.
A Vodafone Idea senior executive had mentioned at an event last year that the company will continue to work with the Chinese vendors for radio and transport network expansion but not for core network expansion. Last year, Vodafone Idea continued working with Huawei and ZTE to address capacity and congestion issues for wireless radio and transport networks in areas where the two companies were already working together.
Reliance Jio is the only service provider that doesn't engage with the Chinese vendors.
So, one can say that while Huawei continues to get small business from the Indian service providers, big deals will continue to elude it because of the change in the government policies and regulations.
Not too long back, the Chairman of Bharti Enterprises, Airtel's parent company, Sunil Bharti Mittal, had said that the gear from Chinese vendors was superior and India should allow Chinese vendors to continue operating in the country. He was speaking at an event organized by World Economic Forum. Off-the-record interactions with the industry's senior officials point out that the Indian telcos would like Huawei to continue its presence in India because of the cost advantage.
Though India doesn't really make a significant contribution to Huawei's revenue, it is one of the critical markets for Huawei, and the company has made a special place for itself in the country. Several countries, including the U.S., the UK, and Australia, have banned Huawei from participating in the 5G market because of security concerns. Unlike these countries, India has refrained from putting an outright ban on Huawei though it makes it difficult for the company to do business in the country.