Vendors Suffer From LTE Delays

The wireless network vendor community in India is feeling the pinch as the country's mobile operators continue to postpone their network expansion plans and demand unrealistic deals.

The recent deal between Bharti Airtel Ltd. and ZTE Corp. in the Kolkata circle (service area) is a case in point. According to a reliable industry source, the deal is based on revenue-share model and does not involve any capital expenditure on the operator's behalf. (See IndiaWatch: Bharti Identifies LTE Vendors?.)

"There is a total freeze on capital expenditure [at the operators] and this deal exemplifies it," says a top industry source on condition of annonymity. "This would not have been possible in normal circumstances but now vendors are ready to bend themselves backwards to get any deal," adds the source.

After paying billions for 3G and Broadband Wireless Access (BWA) spectrum, the operators are looking for every way possible to minimize their spending. In addition, there has been relatively slow uptake of 3G services following the initial round of 3G network upgrades and that perceived slow return on investment is putting extra pressure on the carriers' budgets. (See Anil Tandan: CTO, Idea Cellular and Idea MD Justifies Tariff Hike.)

Further adding to the gloom is the low level of LTE TDD purchase order activity by the BWA (Broadband Wireless Access) license-holders to date: Expectations that there would be a number of LTE TDD deals this year were totally off the mark. As of now there is just one officially announced LTE TDD deal, between Ericsson AB and Augere Holdings. (See Ericsson Lands India's First LTE TDD Deal.)

While there are a number of LTE TDD trials ongoing, nobody is sure how long it will take for operators to finalize their initial vendor selections and it's unlikely that the resulting deals will generate much revenue for the equipment companies this year.

The LTE TDD deals everyone is waiting with bated breath for are those to be awarded by Reliance Industries Ltd. (RIL), the only company to hold BWA licenses in all 22 circles. However, the company has just entered the second phase of testing and it will likely be some time before the deals are announced. (See RIL Prepares Phase II of LTE Trials and A Year On, BWA Still Not In Sight.)

"The LTE TDD market is going to develop totally differently" to the 3G market, says Sridhar Pai, CEO at research and consultancy firm Tonse Telecom. "India is leading this segment so the industry would need to experiment with custom built business models and technology capability etc...so it is not going to happen overnight," adds Pai. (See India to Lead the Way With LTE TDD.)

Clearly equipment companies are facing a challenging year in the Indian market. Analysts believe that it might take another 10-12 months for the market to revive.

"We believe that the demand is definitely present and the operators are just postponing the decisions. We believe that it is a correction phase and the market should revive in about a year's time," says Pai.

Gagandeep Kaur, Editor, Light Reading India