Although Ericsson, Nokia, Huawei and ZTE haven’t officially reached out to VIL seeking their dues, they are closely watching the evolving situation, which may adversely affect their respective India revenue streams, already stressed due to lower spending on network expansion and upgrades this year, executives of vendor companies said.
According to analysts, the total exposure of these gear vendors is as high as Rs 8000 crore, including Huawei India's Rs 1200 crore exposure to VIL.
“There is already a panic after Vodafone Group’s announcement. We are monitoring the situation closely and are awaiting the government’s relief measures and hope that eases out the situation,” a senior executive at one European vendor told ET.
Vodafone Group CEO Nick Read said on Tuesday that the status of the India telecom JV with the Aditya Birla Group was critical after the Supreme Court ruling left it facing additional statutory dues, including Rs 28,000 crore as licence fees.
Analysts said Ericsson and Nokia would likely be impacted more if the telco goes into insolvency after being asked to pay up the entire adjusted gross revenue-based dues.
Rajiv Sharma, head of research at SBICap Securities, said if the telecom market is reduced to two private players from three, the bargaining power of Bharti Airtel may increase because Reliance Jio Infocomm works with Samsng.
“You can’t have four vendors chasing a single telco. There will be pricing pressure on all the vendors. With the current situation and uncertainty, vendors may have concerns around recovering their dues from VIL,” Sharma said.
Rohan Dhamija, director, Middle East and South Asia, at consultancy firm Analysys Mason, said that survival will be a question for the vendors.
“While it seems the government is going to help the sector, the question will be how much they could do… it does become a risk for vendors since exposure is there,” he added.
Huawei, Ericsson, Nokia and ZTE didn’t respond to ET’s queries.
BSNL woes for Nokia, ZTE
Notably, Nokia and ZTE are already facing payment issues with state-run telco BSNL. ET recently reported that Nokia may withdraw network operations and maintenance services provided to cash-strapped telco due to non-payment of dues of about Rs 800 crore.
ZTE India CEO Peng Aiguang in a recent interview told ET that the BSNL situation was a deep concern for the company. “We are a strategic partner of BSNL and we are in constant touch with them.”
New wireline contracts: Increasing exposure
Nokia, Huawei and ZTE’s deals with VIL went beyond wireless networks this financial year, with the telco awarding wireline contracts to them.
Huawei got a pan-India national long distance network expansion for capacity augmentation worth about $25 million, a person familiar with the matter told ET. "There was a big order issued by VIL in May this year for the same."
Huawei was already managing the pan-India NLD network --optical transport, OTM and WDM -- for both Vodafone and Idea brands in the country before the merger.
Huawei also won some new business from Vodafone Idea for packet core, while Nokia won new business for IP transport and packet core in at least four new circles, the person said.
“ZTE, on the other hand, got a contract worth $10 million for metro, transport and microwave for the Delhi circle where it swapped Coriant. It also got a contract for massive Mimo as well," he added.
Another person said that VIL was expected to come with new request for proposals (RFPs) for NLD expansion among others, but due to the ongoing issue, it appears to be unlikely.
Download The Economic Times News App to get Daily Market Updates & Live Business News.
- Nokia launches two affordable smartphones
- Nokia, Ericsson promise to make 5G gear here: Airtel
- Nokia warns of sacking staff working on BSNL project over outstanding payments
- Nokia to set up robotics lab at Indian Institute of Science Bengaluru
- Nokia, BNP earnings prop European stocks as growth worries linger
- Got any signal up here? Nokia and NASA are going to build a mobile network on the moon
2 Comments on this Story
Nniuq 346 days ago
You cannot do much when TRAI, DOT and the PMO of the nation works for JIO. And now we all know there is a new entrant to the list, a constitutional institution working for Ambani. India is already a slave again. Ache din Finally!!
Shri Mahesh346 days ago
Nonsense. Its all OK. Increase prices. Cut all debt. Pay taxes on time. Cheers