Vodafone Idea (Vi), an Indian telecom operator, has awarded a fresh optical transmission equipment network order worth around Rs 230 crore to Chinese company ZTE for Gujarat, Maharashtra, and Madhya Pradesh-Chhattisgarh. The telco is upgrading its network, and for a fresh network deployment or upgrade and maintenance, telcos have to take approval from the National Security Council Secretariat (NSCS) and provide information regarding vendors and their technology. Notably, ZTE hasn't been given the trusted sources approval by the NSCS, said an ET report.
Finnish gear maker Nokia and US-based Ciena were also in contention to get the contract, but Vodafone Idea ultimately chose ZTE. It is worth noting that Vodafone Idea’s optical transmission network has deployments from both Huawei and ZTE across all telecom circles.
Airtel, another Indian telecom operator, had last year awarded a telecom infrastructure expansion contract worth Rs 150 crore to Huawei. Under the deal, Huawei upgraded and expanded Airtel's National Long Distance (NLD) network. Airtel awarded a similar contract to Huawei worth Rs 300 crore in 2021. Both these contracts were given to Huawei despite the latter not having the trusted sources approval.
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Since the trusted sources regime came into effect, both Huawei and ZTE have largely engaged with Indian telecom operators Vodafone Idea and Bharti Airtel for servicing existing network maintenance contracts. They are only allowed to replace existing parts, with even network upgrades needing government clearances.
India approved the National Security Directive on Telecommunication Sector in December 2020, which mandates service providers to purchase equipment from trusted sources. The government declares a list of trusted sources and products for installation in the country's telecom network. However, annual maintenance contracts or updates to existing equipment already inducted in the network before the directive came into effect are not affected.
Both Huawei and ZTE have been on the radar of the Income-tax department on suspicion of tax evasion. The Income-Tax Department searched Huawei India offices in February last year. The department had, in August 2021, conducted similar searches on Chinese telecom gear maker ZTE Corp and unearthed tax liability worth hundreds of crores, unaccounted cash, and a failure by the company to file TDS for several financial years.
Airtel had last year selected Ericsson, Nokia, and Samsung for its 5G network, effectively pushing out Huawei and ZTE from the 5G race. Vodafone Idea, on the other hand, hasn't given any contract for its 5G network and is yet to share its 5G rollout plan.
