INDIA BUSINESS WORLD - JANUARY 16^th - JANUARY 31^st - 2008

CHINESE TELECOM NETWORK MAJOR HUAWEI BAGS RCOM'S $600-M GSM CONTRACT

Telecom major Reliance Communications (Rcom) is learnt to have awarded a nationwide GSM rollout contract for electronics valued at about $500-600 million to Chinese telecom network major Huawei. The contract is for the 14 circles for which the telco recently received GSM spectrum.

When contacted, an RCom spokesperson declined to comment. However, according to sources, advanced negotiations went on over the past weekend and the announcement on the contract is expected shortly.

RCom's equipment contract to Huawei would be the first nationwide GSM rollout contract for electronics and more contracts for various equipment categories are expected to be signed over the next couple of weeks. Under its GSM rollout plans, RCom plans to invest over Rs 6,000 crore in GSM electronics alone.

RCom got GSM licence in December 2007 and the department of telecom (DoT) allotted it spectrum for 14 circles early this month. The GSM operators' body, Cellular Operators' Association of India (COAI), continues to oppose DoT's move to allow dual-technology operations and is currently involved in a legal battle with the telecom department over the same.

RCom has been allotted 4.4 MHz of start-up spectrum in the 14 circles by DoT. Reliance, through its wholly-owned subsidiary, Reliance Telecom, already offers GSM services in the remaining eight circles.

RCom had earlier floated the tender for 80-100 million GSM lines, valued at around $6-billion and touted as the country's largest order for telecom equipment and one of the largest worldwide. The order, spread over a three-year period, is likely to be finalised in the next few weeks. The order will have both 2G and 3G components.

It would be a major win for Huawei too, which lost out on the BSNL tender for 45.5-million GSM lines. The BSNL tender was later halved to 22.75 million GSM lines and was bagged by global equipment majors Ericsson and Nokia-Siemens.

RCom will roll-out GSM services in the 14 circles within the next couple of months and is expected to offer tariffs that are up to 30% lower than the prevailing GSM call rates.

RCom said the rollout of GSM services would help it target the fast-growing subscriber additions of 6 million GSM subscribers every month and address the telecom requirements of the existing 172 million GSM customers with the launch of nation-wide GSM network in addition to its CDMA network.