Coronavirus outbreak may likely affect Airtel, Vodafone Idea’s 4G expansion and rollout as Chinese vendors will be unable to supply network gear over the period of time. Reliance Jio Infocomm not likely to be impacted as it sources gear from South Korea’s Samsung, which we are already aware of. Bharti Airtel and Vodafone Idea are staring at costlier 4G expansion and rollout plans on account of coronavirus disruption in China as per Economic Times report. Indian telcos might be compelled to source their network equipment needs to non-Chinese vendors if China is unable to manage the epidemic crisis in the next few months.
Airtel and Vodafone Idea Will Have to Check for Non-Chinese Vendors
The telecom operators are keenly eyeing the developments of coronavirus outbreak in China since they have only a few months of network gear left, industry insiders told ET. The companies may now need to switch to European suppliers. Airtel and Vodafone Idea source their network equipment from Chinese vendors Huawei and ZTE and such they are most likely to be affected by the coronavirus disruption. Reliance Jio Infocomm’s operations will remain unaffected as its sources its equipment from South Korean electronics major Samsung.
If the epidemic lingers beyond three months, it would “possibly increase their network gear procurement costs by around 10-15% for key items in selective circles such as 4G switches, radio equipment and massive MIMO systems,” according to Rajiv Sharma, research head at SBICap Securities.
However, Rajan Matthews director general of Cellular Operators Association of India (COAI), though ruled out any immediate impact on the telcos. He added the companies usually have two-three months of buffer stocks of network products, spares and other components at hand to tackle sudden disruptions. Beyond the three month period, companies would surely have to look for different vendors according to him.
Meanwhile, the network vendors are already taking drastic countermeasures at their manufacturing units in China, in order to ensure the smooth running of supply chains for key markets such as India.
Chinese Vendors Downplay the Concerns
Huawei has reportedly beefed up safety precautions at its main Dongguan network gear manufacturing unit in Southern China, that largely caters to the needs of clients such as Airtel and Vodafone.
“Stringent safety guidelines are being followed across the company to ensure the equipment supply chain does not get impacted,” Huawei India spokesperson told ET. She further reiterated that business operations in India are not likely to be impacted as the current demand for network gear is well within its supply capacity.
Another vendor Ericsson India said they won't be impacted by the coronavirus as it manufactures network equipment at its Pune facility”. Airtel, Vodafone and Reliance Jio Infocomm, however, didn’t comment on any of the developments as of yet.
