India, the second largest emerging market in the world, is likely to turn out as a “Treasure Island” for the global telecom equipment manufacturing giants. The first phase of 3G network deployment is almost complete in India. Furthermore, some big telecom operators such as Bharti Airtel, Reliance Industries Ltd., and Tata DoCoMo, a joint venture between Tata Communications Ltd. (TCL) and NTT DoCoMo (DCM) may start deploying 4G LTE networks from late 2011.
Massive deployment of high-speed wireless networks throughout the world has opened up a new market for telecom outsourcing or managed services for several telecom equipment manufacturing firms. The next-generation (3G/4G) wireless networks are aiming to cope with substantial demand for high-speed wireless data services and mobile video. The telecom services providers are now typically looking forward to providing the converged IP-based network offering bundled solutions for triple play voice, video and data. This requires the implementation of complex network architecture.
The telecom outsourcing market generally includes network implementation & maintenance, system integration & managed services, and consulting. In order to minimize their costs, wireless carriers try to concentrate on developing new services, implement a service-oriented business model, and marketing. The market for basic network operation is increasingly witnessing the entry of infrastructure suppliers. This generates a huge opportunity for telecom equipment manufacturers.
According to various industry researches, the approximate global size of this market is expected to be between $250 billion - $275 billion by 2020. Asia alone is anticipated to generate 25% of the total. India is currently having more than 750 million of wireless subscribers but penetration of 3G is less than 1%. This indicates huge scope of growth for wireless carriers and consequently the telecom gear makers and infrastructure solution providers will also be hugely beneficial.
The two major beneficiaries of the telecom managed services will be L.M. Ericsson AB (ERIC) and Nokia Siemens Networks, a joint venture between Nokia Corp. (NOK) and Siemens AG (SI). However, the two Chinese giants, viz, Huawei Technologies and ZTE Group, will be the nearest competitors. Indian telecom operators generally opt for multi-vendor solutions. Therefore, this will result in more than one equipment manufacturer servicing a single telecom operator in several telecom circles.
In the first phase of 3G network rollout in India, total 6 telecom operators together awarded network infrastructure solution contract in 68 telecom circles. Of this total, Ericsson won 21 circles, Nokia Siemens Networks won 20 circles, Huawei won 18 and the remaining 9 was awarded to ZTE. Alcatel-Lucent (ALU), a big winner for the 2G network deployment in India, is also trying hard to get a pie from the 3G/4G managed services deal.
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