INDIA BUSINESS WORLD - JULY - AUGUST - 2007
The Month that was ...

BHARTI, ERICSSON SIGN $2B NETWORKING DEAL

BHARTI Airtel, India's largest mobile operator has awarded a record $2-billion network outsourcing, maintenance and management contract to Swedish telecom infrastructure major Ericsson. This will be Bharti's second billion dollar networking outsourcing deal with Ericsson in under an year - in August last year Bharti had signed a $1-billion deal with Ericsson. This marks the largest ever network deal in India and is also amongst the biggest contracts globally in the telecom space. The deal with Ericsson comes just weeks after Bharti had awarded a $900 million network expansion contract to Finland based Nokia Siemens Networks for eight telecom circles in the country.

"This marks the biggest deal our company has got into. It is a clear testimony to the big growth that is taking place in the Indian market," Bharti Enterprises group managing director Akhil Gupta told the media. Telecom infrastructure has have two components - the radio part and the core network. "The core that Ericsson will set up is both 2G and 3G enabled, but the radio part is only 2G. Therefore, for starting 3G services the company will have to float another tender for radio-enabled network, Mr. Gupta added.

As per the deal, which is spread over two years, Ericsson will design, plan, deploy, optimise and manage Bharti Airtel's GSM network across 15 circles in India as well as for its pan-India prepaid (IN) platform across 23 circles. In addition, Ericsson will also deliver pan-India Integrated Device Management Solutions, enabling usage of advanced data services by all mobile customers across retail and enterprise segments, Bharti president & CEO Manoj Kohli said.

Mr. Kohli also pointed out that Ericsson has been a strategic partner of Bharti Airtel since 1995, and manages around 70% of its GSM/EDGE network spread across in 15 circles in India. Ericsson's nationwide charging solution (IN) caters to Airtel customers across all the 23 circles of Airtel Bharti. "Though Nokia Siemens has the network expansion and maintenance contract across eight circles, Ericsson will provide the IN platforms in these circles too as we want our pre-paid experience to be common across India - 80% of our subscribers are on pre-paid," Mr. Kohli added.

This also marks Bharti's fourth major outsourcing deal with Ericsson in as many years. In February 2004, Bharti signed a similar agreement with Ericsson valued at over $400 million to build and manage networks across 13 circles, followed by a $250-million deal in June 2005 to provide managed services and expand its GSM/GPRS network in 15 circles. Bharti then topped it up with a $1-billion network expansion deal with Ericsson for the same 15 circles in August 2006.

Bharti Airtel has also signed four network expansion deals with Nokia - in May 2004, it had signed a three-year deal with the Finnish company a valued at $275 million to build and manage networks across five circles, topping it with another $125 million three-year agreement in August 2005 for GSM/EDGE expansion in eight circles and followed it up by another deal in October 2006 for the same eight circles for $400 million.