Nokia has inked a major, multi-year network deal with India’s Bharti Airtel to expand the telecom operator’s 4G coverage and increase capacity.
Financial terms were not disclosed but reports peg the deal value at nearly $1 billion.
Airtel will deploy Nokia’s Single Radio Access Network (SRAN) solution across nine circles in India (telecom regulators laid out a telecom map dividing the country into 22 ‘circles’ or service areas). Nokia is the sole SRAN provider in these nine circles and the vendor said its product enables operators to manage 2G, 3G, and 4G networks from one platform.
Plans call for the deployment of about 300,000 radio units by 2022, across spectrum bands including 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz.
“This is an important agreement for the future of connectivity in one of the world’s largest telecoms markets and solidifies our position in India,” said Rajeev Suri, president and CEO at Nokia, in a statement.
The deal also includes the Finnish vendor’s RAN equipment including AirScale Radio Access, AirScale BaseBand and NetAct OSS.
India has seen a significant surge in demand for data services, according to Nokia’s MBiT Index 2020, which said traffic increased by 47% in 2019 alone.
Nokia and Airtel each said the network expansion will help lay the foundation for rolling out 5G services in India, but did not cite a timeframe for next-gen services.
Sector in turmoil
Earlier this year Airtel indicated it may not participate in India’s 5G spectrum auction because of high prices.
In an April 13 research note, Jeffries equity analysts said that while operators are “unlikely to buy 5G spectrum, they may buy renewal spectrum worth US$2-7bn in the next spectrum auctions.”
India’s telecom sector was hit after the government required major operators, including Airtel and Vodafone Idea, to pay around $12 billion collectively in past due fees related to spectrum licenses, a decision upheld by the country’s Supreme Court.
That raised concerns that the dues levied against Vodafone Idea could force the operator into bankruptcy. Analysts at New Street Research believe that risk is receding though.
In an April 20 research note to investors, the firm pegged the probability of Vodafone Idea exiting the market at 20%, with the coronavirus pandemic putting added pressure on the Indian government to provide relief and not insist on full and immediate payment of the some $4 billion fees.
“Prior to Covid-19 it appeared that the Indian government was already moving towards finally taking action to save VIL, and we think that India’s lockdown and the resultant surge in data traffic is providing a fairly forceful example of why previous policies which have left the telecom industry on the brink were not in India’s best interest,” wrote the team led by Chris Hoare “Now is not the time to lose 1 of the countries’ national telcos.”
Jeffries, meanwhile, expects that by fiscal year 2023 it will be a challenge for Vodafone Idea to service payments, likely resulting in consolidation into a duopoly between Bharti Airtel and Reliance Jio. The firm anticipates the pair could capture 80% revenue market share by 2023 and that Airtel is in a favorable position to capture 35% share by that time.
Jeffries expects that operators’ recent hike in data prices by 30-40% and likely future increases, combined with increasing data penetration in India, to overall expand the sector’s revenues by 44% to $28 billion in the next three years.
“Bharti Airtel is well placed to ride the upswing in sector revenues given its strong spectrum footprint, robust balance sheet and strong execution,” wrote the Jeffries team. “Bharti Airtel is one of the few companies in India that have raised US$6bn worth of equity/quasi-equity over the past year. This should help the company tide over the ongoing disruption due to COVID-19 as well as AGR-related additional payments."