Alcatel-Lucent Nabs $1B Telecom Contract from India’s Reliance

Posted by Sam Churchill on

The Trillion-dollar telecommunications industry is unlike any other in the history of mankind, says Tomi Ahonen in Communities Dominate Brands. The planet currently has 7.07 Billion humans and we are at 6.71 Billion mobile subscriptions, generating revenues of $1,036 billion. In 2013, the world will add at least another 600 million subscribers, a point at which the number of mobile phones will exceed the human population.

Deloitte predicts LTE subscriber will triple in 2013, to 200 million globally. Some predict a more conservative 116.8 million LTE connections worldwide by 2014, with HSPA constituting 75% of high-speed mobile data connections by 2014. In China and India a billion people will move from voice to internet-connected data in the next 3-5 years. TD-LTE coverage could reach 30% to 35% in China this year.

Take India. This week, Reliance Communications gave an eight-year contract valued at more than $1 billion to telecom equipment maker Alcatel-Lucent to manage the east and south of India.

The network outsourcing contract by Reliance Communications, India’s No. 3 carrier, is intended to cut costs. The telecom gear maker will manage the nationwide mobile network in a five-year $750 million deal. Reliance and Alcatel-Lucent began a global joint venture for a Managed Network Services agreement in July 2008.

About 4,000 people, about 15 percent of the Indian company’s employees, will move to Alcatel-Lucent as part of the deal, Gurdeep Singh, Chief Executive of Reliance Communications’ wireless business, said on Wednesday.

Airtel was the first provider to launch 4G in India and has activated TD-LTE in Kolkata, Bengaluru and Pune. Bharti Airtel acquired 49 percent interest in Qualcomm’s India entities that hold BWA licenses in Delhi, Mumbai, Haryana and Kerala. Airtel has the advantage of pan-India 2G and 3G networks while offering services on its comprehensive 4G network.

Airtel’s TD-LTE network is built and operated by ZTE in Kolkata, Huawei in Karnataka, Ericsson in Punjab and Nokia Siemens Networks in Maharashtra. Bharti Airtel is India’s largest telecom operator.

Infotel Broadband, a subsidiary of Reliance Industries, is India’s 2nd largest telecom operator.

Most leading Indian telecommunication carriers have outsourced the management of their networks to firms including Ericsson, Nokia Siemens Networks and Chinese firms Huawei and ZTE as they try to lower their costs. Sprint outsourced their carrier management to Ericsson in a $5 billion deal back in 2009.

Reliance is the world’s 15th largest mobile phone operator with 134 million Indian mobile phone customers as of November, and is controlled by billionaire Anil Ambani. It’s India’s 2nd largest telecom operator after Bharti Airtel, with 183.61 million subscribers in India.

Reliance has lagged rivals Bharti Airtel, Vodafone India, Aircel and Idea Cellular and is the most-leveraged Indian carrier, with a debt load of about $7 billion.

India had 13.5 million broadband subscribers at the end of February 2012, according to Telecom Regulatory Authority of India. The number of 2G mobile subscribers are the overwhelming majority, at 911 million.

With Infotel (Reliance) and Qualcomm (Bharti Airtel) going with TD-LTE, and cellular operators Airtel and Aircel buying another 12 BWA slots, India is strongly committed to TD-LTE, using 2.3 GHz outdoors and 2.6 GHz indoors.

Qualcomm had acquired LTE spectrum in key circles of Delhi and Mumbai apart from Haryana and Kerala during the 2011 spectrum auctions for which it paid close to $1 billion. It then sold 26 percent of its stake to Indian companies – Tulip Telecom and Global Holding Corp – in order to comply with Indian laws that allow only 74 percent FDI in telecom carriers.

Airtel bought out Qualcomm’s remaining shares, diluting Qualcomm’s stake in the venture. Airtel can then launch a pan-India LTE network, just like Reliance Industries, which owns Infotel Broadband, which won spectrum in all 22 circles.

Bharti Airtel has some 186.41 million subscribers, followed by Vodafone with 153.15 million users, Idea with 115.70 million, BSNL with 96.28 customers and Aircel in the fifth spot.

The availability of TD-LTE spectrum in India, China, Japan and the United States is likely to create a 4G “world phone” with infrastructure provided by the big five telecom equipment suppliers and handsets available from today’s major suppliers of smartphones, i.e., Samsung, Apple, HTC, Hauwei, ZTE, etc.

In the United States, LTE is thought of as a premium service, offering faster speed. In fact, LTE is a cheaper way to deliver service. One basestation can deliver 2-3 times the number of subscribers, lowering costs.

The impact of nearly 2 billion people with access to broadband wireless (pdf) will profoundly alter geo-politics. Presumably it will be (mostly) a good thing if you believe in human nature (as I do). But nobody knows what to expect.

That’s what makes it interesting!

Related Dailywireless articles include; LTE-Advanced: Upsetting the Apple Cart?, China: 1 Billion Mobile Activations, India: HSPA King by 2016, India’s Broadband Auction: It’s Done, Qualcomm Gets Indian Partners, Vendors Scramble for Indian Backhaul, TD-LTE: It’s Alive!,

Posted by Sam Churchill on Wednesday, January 16th, 2013 at 9:17 am .

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