Vodafone Idea seals Rs 13,500 crore equipment deal with Nokia

Kolkata: Vodafone Idea (Vi) has inked a near ₹13,500-crore deal with Finland's Nokia to buy equipment over a three-year span for its 4G network expansion and 5G roll out.

Multiple persons privy to the deal details said Nokia will supply 4G and 5G network equipment to Vi in nine circles. The Finnish gear maker will supply Vi its 5G AirScale network gear portfolio and also upgrade the telco's existing 4G network with multiband radios and baseband equipment, which can also support 5G.

The deal is part of Vi's recently announced plans to buy $3.6 billion (read: ₹30,000 crore) of 4G and 5G gear from Nokia, Ericsson and Samsung over a three-year span to bolster its 4G operation and roll out 5G networks in key cities across its 17 priority circles. The move was seen as a significant step from Vi to improve its competitiveness in the market against bigger adversaries Reliance Jio and Bharti Airtel and also stem customer losses.

Under the new contract, Nokia will handle 4G and 5G base station supplies for Vi in Mumbai, Gujarat, Andhra Pradesh, Haryana, UP-East, UP-West, West Bengal, Kolkata and Tamil Nadu/Chennai markets, one of the people cited told ET.

But Vi remains locked in intense negotiations with its other key gear supplier, Sweden's Ericsson, to quickly finalise commercial terms. This is since Ericsson has not yet agreed on the equipment pricing and payment terms as Vi has not furnished the letters of credit (LCs) required by the global vendor to accept and service the first round of upcoming purchase orders (POs) from the telco.

The LCs, typically, would have to be given by banks guaranteeing that Vi's payments to the vendor for its upcoming 4G/5G gear buys would be received on time and for the contracted sums.

In response to ET's queries, Vi confirmed that execution of detailed agreements is pending with one global vendor. "We are pleased to inform that detailed agreements (with detailed terms and conditions) have been executed with two vendor partners and the third one will be signed soon," a Vi spokesperson said.

Vi, in fact, is trying to wrap up commercial agreements with Ericsson fast to ensure network gear deliveries from all vendors can start early-November. The telco's CEO Akshaya Moondra recently told analysts that Vi expects to conclude its balance ₹35,000 crore fundraising plans in two months.

At press time, Nokia, Ericsson and Samsung had not replied to ET's queries.

Industry executives, though, said Ericsson and Samsung are awaiting clarity from Vi on the final vendor-wise circle wins. This is since both are believed to be strongly pitching for the Delhi gear supply contract. Delhi is among the most profitable telecom markets in India, and whoever wins will automatically bag a larger deal to supply both 4G and 5G equipment to Vi.

Insiders added that a tussle is also underway between Ericsson and Samsung for the lucrative Punjab circle, which the South Korean vendor wants as it has a strong presence in the state as it's already managing Bharti Airtel's equipment supply needs there.

If all commercial agreements get closed by next week, Ericsson will likely meet Vi's 4G/5G base stations needs in nine circles - Rajasthan, Himachal Pradesh, J&K, Karnataka, Maharashtra, Northeast, Assam, Kerala and Madhya Pradesh. A potential Delhi metro win could boost the Swedish vendor's tally to 10 markets.

Samsung, in turn, will likely handle gear supplies in Bihar and Odisha, though the Korean vendor is believed to be pitching aggressively for both Delhi and Punjab markets.