The ongoing tensions between India and China are showing an adverse effect on the commercial telecom business. Government of India is planning to stop Chinese vendors from providing telecom equipment to state-owned telecom operators BSNL and MTNL. However, private telcos operating in India and Huawei is opposing the government’s decision of banning Chinese telecom equipment makers in the country. As reported by ET Telecom, private telcos and Huawei stated that the ongoing geopolitical challenges must not be allowed to disrupt the commercial operations between telecom operators and Chinese telecom equipment makers.
Telecom Operators Will Witness Higher Network Gear Procurement Costs
Telecom operators have noted that they will follow the rules and laws which will be put forward by the government of India. However, telcos also stated that commercial operations must not be mixed with other considerations. As per a top Huawei executive, if the government will ban Chinese telecom equipment in the country, private telcos will witness higher network gear procurement cost. Telco giants such as Vodafone Idea and Bharti Airtel will witness 20 % to 30 % increase in network procurement costs if they are pushed to purchase telecom equipment from non-Chinese vendors. In the end, the burden will be shifted towards customers as telcos will have no other option to bear the extra cost.
Telecom Operators Will Abide by the Laws
Telecom operators have already stated that they will follow the rules and laws put forward by the government. Rajan Mathews, who is the director-general of COAI, stated that geopolitical issues are the fount of the government and such decision should be kept away from the commercial ones, which are the fount of the companies.
Huawei and ZTE have made their space in the Indian telecom market, and they collectively command a fourth in the market. Huawei, in the past 20 years has invested over $2 billion and created 6,000 jobs in the sector to provide employment and make telecom network gears more affordable. As per analysts, if the telcos will be asked to stop purchasing telecom gears from Chinese vendors, it would create new challenges for the telecom operators.
