Telcos see rise in costs if Chinese cos kept out

Mobile phone service providers are said to have called on the government to keep operational continuity in mind while deciding on whether to allow Chinese vendors Huawei and ZTE to participate in rolling out 5G networks.

New Delhi: Mobile phone service providers are said to have called on the government to keep operational continuity in mind while deciding on whether to allow Chinese vendors Huawei and ZTE to participate in rolling out 5G networks.

If the Chinese vendors are kept out now, telcos will face time and cost overruns in seeking equipment from alternative vendors, leading to supply and cost issues, industry executives said, asking not to be identified.

“This is a matter on which the government has to take a decision and the industry will comply. We are hopeful that the government will take into consideration the industry’s requirements, including continuity of operations to serve a billion Indians,” SP Kochhar, director-general of the Cellular Operators Association of India, told ET.


The association represents Reliance Jio, Bharti Airtel and Vi, besides network equipment suppliers.

The US has been driving efforts to restrict Huawei from next-generation network rollouts worldwide. Sweden is the latest country to have decided to bar Chinese vendors.

Keeping Huawei out of deploying 5G infrastructure in India could increase investment costs by 8% to 27%, according to a recent study by UK-based Oxford Economics that was commissioned by the Chinese company.
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Last week, the European Competitive Telecommunications Association denounced any ban on Chinese 5G suppliers in Europe, saying a move based on political reasons would increase deployment costs and delay network upgrades. Japan has reportedly said it will not join a framework that excludes any specific country in 5G network rollouts.

India has not decided on Chinese vendors, although it has informally restricted state-run telcos from sourcing their equipment, citing national security concerns. The government has also been nudging private telcos to gradually keep away from Chinese vendors and replace existing equipment over time.

Opposition to Chinese vendors has grown in the country in the backdrop of border tensions between India and China.

Cost has become an even more critical factor for Bharti Airtel and Vi, which are required to pay thousands of crores of rupees in adjusted gross revenue dues.
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Meanwhile, the US Agency for International Development said it is ready to finance network deployment in developing countries if they shun the use of Chinese equipment.

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