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Tuesday, July 07, 2020

Ban on Chinese equipment: No communication from DoT yet, private telcos say

Any “knee-jerk” reaction to bar private telcos from using Chinese equipment is also likely to have cost implications for both the telcos, an Airtel executive said.

Written by Aashish Aryan | New Delhi | Updated: June 29, 2020 7:01:22 am
boycott china, india china border row, chinese imports india, chinese invesment india, india china conflict, Indian express As per industry estimates, Chinese telecom gear vendors have about 25 per cent of the total domestic market share. (File Photo)

The Department of Telecommunications (DoT) is yet to issue a formal order or talk even informally to private telcos Bharti Airtel and Vodafone Idea to desist from using Chinese telecom equipment for any of their future expansion plans, senior executives from both the companies said.

Among the three major domestic telecom operators, only Bharti Airtel and Vodafone Idea have been using Chinese equipment, while Mukesh Ambani-led Reliance Jio Infocomm uses equipment made by South Korea’s Samsung.

Explained| Will banning Chinese imports hurt India’s exports?

Any “knee-jerk” reaction to bar private telcos from using Chinese equipment is also likely to have cost implications for both the telcos, an executive at Bharti Airtel said.

“The planning for 4G expansion or 5G roll-out is always long-term, planned 2-3 years in advance, and the agreements are signed accordingly. If we or Vodafone (Idea) are asked to terminate all contracts, international arbitration, penalties could follow. These are serious costs,” the executive said.

Talks of the DoT asking private telcos to refrain from using Chinese equipment surfaced after government sources had last week said that state-run telcos Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have been asked to rework their 4G expansion tenders so as to exclude Chinese telecom equipment vendors.

The DoT had then said that the order may be extended to apply to private telcos as well. Detailed questionnaires sent to Bharti Airtel and the DoT did not elicit any response, while Vodafone Idea declined to comment on the issue.

Read| Do you really have an option if you want to boycott Chinese phones? 

According to industry estimates, Chinese telecom gear vendors have about 25 per cent of the total domestic market share. While Bharti Airtel uses up to 30 per cent Chinese telecom equipment for its networks, Vodafone Idea uses as much as 40 per cent.

Most of these equipment, however, are deployed in non-core telecom functions, which are hardly a risk to “network safety”, a Vodafone Idea executive said.

Another issue, the executives said, is that if Chinese telecom vendors such as ZTE and Huawei are barred from Indian markets, the prices of equipment could rise by up to 30 per cent, as it would leave only European equipment makers such as Ericsson and Nokia in the fray.

“Overall, the prices of Chinese gears are up to 30 per cent lower compared to their European competition. That gives us buyers a point to negotiate. With them (Chinese companies) gone, our power to negotiate also goes,” an executive said.

In a late night briefing on June 17, DoT sources had said that BSNL and MTNL had been asked not to use Chinese equipment and that a tender for 4G expansion which was floated in March was also cancelled. The reworked tender, to be floated later, is likely to contain provisions spelling out the ban on Chinese telecom gear vendors.

Editorial| Easier said

The decision had been an economic repercussion of the border skirmishes at Galwan Valley in Ladakh, in which 20 Indian soldiers had been killed. Apart from India, Chinese telecom equipment maker Huawei has been under scrutiny in other countries including the US with allegations of snooping. The US had also been putting pressure on countries with friendly trade relations such as India to stop buying telecom equipment from Chinese vendors.

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