The Huawei-Vi add-on contract


Posted June 30, 2021 by CommunicationsToday

Vodafone Idea had awarded an “add-on” contract worth Rs 400-450 crore to Chinese gear maker Huawei for wireless and wireline network upgradation,

 
just before the March 10 government notice amending telecom licenses, mandating the use of equipment only from trusted sources from June 15, 2021.

Huawei though has been only fulfilling only limited equipment deliveries as the Indian telco already owes some Rs 850 crore to the Chinese vendor, people familiar with the matter said. Vodafone Idea and Huawei denied any new contract signing between the two sides this year. But sources say the latest contracts were not new ones, but additional ones for upgradation in circles where Huawei is the existing supplier and were not for core areas of the network.

“The new business includes wireless and wireline upgradation including microwave and transport network along with software upgradation. The order was given in March alongside the Airtel-Huawei national long-distance deal,” a person familiar with the matter said. Communications Today brings latest Vodafone idea news.

Another person said the additional business was given to Huawei just weeks before the Department of Telecommunications’ (DoT) notice to amend telecom licenses for security reasons. The government’s move is widely believed to be the first step to ensuring that Chinese equipment majors like Huawei and ZTE are not included as telecom vendors at a time when the sector is poised for 5G roll out. The two have been kept out of 5G trials in India.

“The contracts given by Airtel and VIL relate to an upgrade of existing equipment in the circles where Huawei is an existing vendor/provider. It was important for operators to allocate this contract before the government came out with the list of trusted vendors so that they could future proof their networks in circles where Huawei is the vendor,” said Ashwinder Sethi, a principal at consulting and analyst firm Analysys Mason.

However, the gear vendor is supplying only against limited purchase orders (POs). “Huawei doesn’t want more money to get stuck with Vodafone Idea due to its current financial situation. They are delivering against small purchase orders as and when VIL clears some payment for previous orders,” he added.

Huawei provides 4G wireless equipment to Vodafone Idea in seven telecom circles, namely Delhi, Kerala, Odisha, Punjab, Bihar, Karnataka and Tamil Nadu. Out of these, three circles are shared with ZTE and Nokia.

Vodafone Idea CTO Jagbir Singh had told ET in March that it will continue to work with Chinese vendors Huawei and ZTE for its radio and transport network expansion for capacity and coverage needs but only in circles where Chinese vendors already serve the telco. He though had added that the telco won’t give any new contracts to Chinese vendors.

The trusted vendor list is extremely important for Huawei’s perspective as it decides its future in the Indian market. “If it is part of the list then there is a reasonable likelihood that it will continue to get upgrade contracts for 2G/3G/4G technologies in the circles where it is a vendor to Airtel and VIL,” Sethi added.

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Last Updated June 30, 2021