savramesh 37 Report post Posted April 20, 2009 Business Standard Monday, Apr 20, 2009 Entrants’ financing need a useful latchkey Innovative financing options for the new telecom operators may be just the deal clincher for Chinese equipment vendors, now competing with European ones, in the Indian market. The European vendors dominate the market here, with over half the share. Recently, Chinese equipment vendor ZTE inked a deal with Essar group-promoted Loop Telecom. It is also in talks with Swan Telecom, Unitech and Datacom, all new operators. The company has also got a contract with the latest entrant in the CDMA segment, Sistema-Shyam, to provide national rollout of their services, together with ZTE handsets. All new operators are expected to spend about $1-3 billion on equipment, an addressable opportunity of at least $5-6 billion in the next three years. “There is not much difference in quality in any of the equipment vendors in the market. Therefore, the edge is dependent on financing options given by the vendors and innovative ways of structuring the contract,” said Prashant Singhal, telecom analyst, Ernst & Young. And added: “It’s easier now for equipment vendors to win new customers, rather than replacing existing players. So, they will get their fair share of incremental opportunity. Also due to their hunger for expansion, they will provide new operators the flexibility in spending and contract they (the latter) require.” ZTE claims its main advantage over incumbents is the financing options it provides following its five-year agreement with China Development Bank, which will provide ZTE a $15 billion credit line, including ZTE’s overseas project financing and ZTE’s credit limit. Says DK Ghosh, chairman and managing director of ZTE Telecom India, “All the new operators have to comply by the rollout obligations put down by the government, so a faster rollout is the key for which we provide them with financing capabilities. Also impacted by the global financial problem, the other players are not able to invest in R&D and innovation, which the Chinese companies are able to do now.” ZTE’s Chinese counterpart, Huawei, has also tied up with Sistema-Shyam and is looking to get its share of the new operators’ pie. A Huawei spokesperson said, “We entered the Indian market at the right time and that is what gave us the advantage. Most of the new operators have already joined hands with one or the other foreign operators, so it is hard to predict how they will place their orders.” It was estimated that service providers would place orders worth $15-20 billion over the next 24 months, of which Chinese equipment suppliers were expected to bag half. Besides business from new operators, ZTE and Huawei have also bagged deals from incumbents like BSNL, Tata Teleservices , Reliance Communications, Vodafone and Idea Cellular. ZTE’s sales revenue is $1 billion, a 30 per cent growth as compared to last year. Huawei in India has grown from earning $180 million in sales in 2006 to $1.5 billion in 2008. “Chinese players are very fierce competitors; they compete on price, which is very important for a market like India. But we have over 6,000 employees in India, along with strong customer support and a stronger research and development presence in India that gives us an edge over the other players, since we can also deploy equipment faster,” says Vivek Mohan, managing director, India regional unit, Alcatel-Lucent. Mohan is optimistic that with time, the experience his company has in India will pay off in the long run. “All across the globe, there has been the trend of price competitiveness. But, after a year or two, the situation rationalises. Also, when volumes increase, the price is bound to rationalise,” said Mohan. Says an executive of another leading telecom equipment vendor: “These Chinese players are doing extremely well in the market, but as for increase in market share, you also have to take into account the growth the entire market has seen, so they’re getting their share.” Adding: “The new operators have a Herculean task to deploy their network at minimum cost and yet have maximum coverage, so the Chinese players are capitalising on that.” Share this post Link to post Share on other sites
ravi_patent 28 Report post Posted April 20, 2009 can we attribute Rgsm's n/w problems for being associated with ZTE ? on that logic, MTS being handled also by ZTE should be having problems is that so ..Any wild guesses? Share this post Link to post Share on other sites
srk006 21 Report post Posted April 20, 2009 ^^ Nope I don't think so. RGSM network problems are the problems every new network experience in the beginning. I am sure even the established GSM players experienced such problems in their initial stages. For the time being I am optimistic on RGSM; the network congestion has reduced large, calls are getting connected in the first try etc Let's give them another 3 months to stabilize. Share this post Link to post Share on other sites
kshah 452 Report post Posted April 20, 2009 AFAIK, all new capacity additions or new networks in last 5 years are supplied by chinese companies, mainly ZTE, Huwei and i forgot name of third company. We indians must learn to respect the fact that chinese produce far far better stuff than we know. We look at them with bios, which is harming us more than doing good. Wake up, else they will eat us away. Share this post Link to post Share on other sites
ravi_patent 28 Report post Posted April 20, 2009 ^ i have due regard for chinese capability.they are almost on par with the west in certain fields..after all they launched their own formats for mobiles and television during bejing olympics Share this post Link to post Share on other sites
