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Telecom Vendors Back "Make in India," Eye 4G Prospects

The "Make in India" initiative was launched in India by Prime Minister Narendra Modi on Sep 25, 2014, with an aim to turn the nation into a global manufacturing hub.

Last year, India imported telecom equipment worth $10.5 billion (INR695.16 billion) while exports valued at a mere $3.1 billion (INR204.75 billion). Thus, though there has been a considerable rise in the uptake of telecom services, the manufacturing volumes are still not on par.

Under the "Make in India" national program, the government aims to invite companies to India through lucrative offers, in order to meet domestic needs and export demand.

This initiative is increasingly gaining importance, clearly evident from the decision to set up manufacturing facilities in India by telecom firms.

Top Players

Top telecom equipment maker Ericsson ERIC recently announced plans to spend $20 million (INR1.32 billion) on a new manufacturing facility in Pune, India, which will manufacture goods for export to around 180 countries. Notably, Ericsson already operates a facility in Jaipur, which manufactures equipment for use within India.

Ericsson further announced a four-year agreement with India's leading telecom services provider, Bharti Airtel, which has so far spearheaded the 4G revolution in India. In particular, Ericsson was chosen by Bharti Airtel for the roll out of 4G ('LTE-FDD') network in Delhi.

Meanwhile, Nokia Networks, a division of Nokia Corp. NOK , received a $200 million contract from Bharti Airtel for the roll out of 4G LTE technology in India. Overall, in the first half of 2015, Nokia sealed 30 deals in India in comparison to 35 in 2014. This clearly hints at the growing popularity of Nokia Networks' technology in India.

In Apr 2015, Nokia Networks had entered into a definitive agreement with Alcatel-Lucent ALU for its full acquisition for a total consideration of euro 15.6 billion (approximately $16.6 billion).

Other service providers like Vodafone India - a subsidiary of Vodafone Group Plc VOD -- Reliance Communications and Idea Cellular are also vying for a share in the prospective 4G market in the fast developing emerging nation - India.

India - A Lucrative 4G Market

With mobile phone operators in the country have jumped on the 4G bandwagon, telecom companies are now looking to make the most of this opportunity.

Telecom equipment makers like Ericsson, Huawei and Nokia Networks are naturally aware of the market potential that 4G holds in India. They anticipate a revenue opportunity of over $1 billion in the next two years as mobile phone operators roll out high-speed 4G LTE broadband services across the country.

Though 4G in India is still at a budding stage, several analysts foresee the installation of 73 new 4G networks in India within a year.

Moreover, according to a recent Ericsson Mobility report, nearly 40% of India's population is expected to avail 4G services by 2020. Naturally, India is gradually gaining importance among telecom equipment suppliers as most carriers are either deploying new or upgrading 3G networks across vast areas.

Bottom Line

With demand for high-bandwidth communication services like video streaming and VoLTE (Voice over LTE) on the rise, India offers significant market potential for telecom service providers and telecom equipment manufacturers alike.

Additionally, factors like the recent downturn in China's economic conditions along with Indian government's favorable regulation policies and incentives should boost the telecom sector in India.

Thus, telecom vendors are poised to benefit from their investments in the Indian telecommunication market, at this juncture.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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