Mumbai, July 30, 2020:India’s decision to ban all Chinese products for 5G network expansion programme and subsequent boycott Huawei and ZTE campaign of the Confederation of All India Traders (CAIT) now has prompted Nokia, Ericsson and other foreign companies to rollout their business plans for Indian turf.
Since India has limited domestic expertise in telecom equipment manufacturing, the boycott-China programme has opened up the floodgates of business opportunities in this field for European, US, Canadian and South Korean companies.
The vastness of 5G user platform in India can be gauged from the fact that currently, India has 375m smartphone users. This number is likely to go up as India’s population is about 1.38billion. The nation, thus, provides the largest market of the world for 5G users which the foreign companies can tap.
Why It Matters
Both the Indian Government and powerful trade body CAIT considers all Chinese companies including Huawei and ZTE as threat to the country’s security. They have also been charged with spying, money laundering and other corporate crimes.
Hence, it is unlikely they can ever do business in India. On the other hand, European, US, Canadian and South Korean enjoy massive goodwill in India.
The companies of China could make entry into the Indian market due to comparative price differences between Chinese goods and those of other countries. Under the changed circumstances, India will pay more attention to national security rather than on pricing factor.
To the question why it matters now, let us have a look at the user-history of components by companies like Reliance Jio, Bharti Airtel, Vodaphone and public sector BSNL. This will help us to understand why flood gate of opportunities now lies open for European and other countries.
Equipment User Pattern by Indian Companies
- Reliance Jio uses Samsung for its older 4G platform. On switching over to 5G, it would require new vendor following exiting of China.
- Bharti Airtel and Vodafone Idea uses Huawei and a mixture of other companies. These companies have already applied for 5G tests with different companies including Huawei. But exiting of Huawei will make it imperative on the part of these companies to look for other vendors which are not of China origin.
- Huawei supplies one-third of Bharti Airtel and 40% of Vodafone Idea’s network. On exiting from India, this Huawei-market share can be captured by other companies of non China origin.
- India’s public sector BSNL and MTNL already announced it would not go for any Chinese component including Huawei and ZTE.
Current Status/Activities of Foreign Companies
- Nokia (Finland) just announced having bagged a new cloud deal from Bharti Airtel. Nokia’s CloudBand-based software products are powering Bharti Airtel’s Voice over LTE (VoLTE) network in India. The latest deal follows the recent $1 billion 4G wireless network expansion deal for 10 circles where Nokia is providing its technology to Bharti Airtel. This VoLTE network has 110 million customers and is India’s biggest cloud-based VoLTE network and also largest Nokia-run VoLTE in the world.
- IBM and Red Hat building 5G ready open hybrid cloud network for Airtel
- Ericsson (Sweden) is providing IMS-based VoLTE in Rajasthan telecom circle. Ericsson, also active with BSNL for its 5G networks, just announced it would cash upon the exit China police of India. The BSNL has already cancelled all its vendor-tie ups with Chinese companies.
- Samsung Electronics (South Korea) is set to capture handset/mobile market in
India following exit-China policy. It announced to enter into Indian smartphone market in a very big way. No Chinese company now can market smartphone in India. Samsung is currently having 16% market share in India’s smartphone market.
- Chinese company Oppo has just cancelled 5G handset/mobile phone launch in India following exit-China policy. Four of the top five smartphone brands in India are of China origin. They are: Xiaomi, Vivo, Realme and Oppo. Together, they hold about 76% smartphone handset market share in India as on March 2020 quarter.
The exit-China policy announcement came at a time when India was doubling up steps to intensify laying of 5G mobile networks. Naturally, such an action plan requires massive supply of component for which India relied mainly on China due to cost effectiveness vis-à-vis European and other countries.
Being next-generation mobile system, the 5G programme would require vast infrastructure, critical components IT-solutions. Since India does not have these, the exit of China has created vast markets for foreign companies. The CAIT is particularly in favour of European nations as vendors for 5G platforms.
The vital most argument for rosy business prospects of European, US and South Korean companies emanated from the fact that after China is exited, a void would be created in supply domain of 5-G components.
Logical support to this premise is that India now has 26 companies engaged in 5G component supply. Of them, 13 are from China or backed by Chinese venture capital including Tencent and Alibaba. When China finally exited in near future, the foreign companies can enter into this domain.
Under the current scenario, non-China 5G component and related service vendors may find the absence of their biggest rival: Beijing. It is in this backdrop that the flood gates of business opportunities for 5G component and service supplies lies open in India.