Vodafone Idea to Renegotiate Terms with Equipment Vendors, ZTE and Huawei to Take the Hit

Newly merged entity, Vodafone Idea Limited (VIL) is renegotiating its terms with equipment partners, Nokia, Ericsson, Huawei and ZTE. Under the new pacts, Vodafone Idea Limited is going to form realigned commercial links with the equipment providers. This step has been taken by the telco to bring down the number of equipment partner per circle down to one, from the present number of three. As per analysts, this step is part of the site-rationalisation and network-integration exercise which comes as a benefit of combined synergies of the two companies. It’s worth noting that right now, the Finnish giant Nokia caters to equipment for Vodafone Idea Limited in 15 circles, while Ericsson does it in 14 circles. Chinese companies, Huawei and ZTE supply equipment to VIL in seven and three circles, respectively.

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Vodafone Idea Limited Likely to Pivot away from Chinese Vendors

Going by the words of Rohan Dhamija, partner and head of India & Middle East at Analysys Mason, “VIL could opt for fewer network gear suppliers, especially since strategic sourcing is rapidly catching on as a concept in a post-merger operations integration scenario, where the merged telecom entity, typically, increases the volume of business to fewer network vendors to obtain better services and bigger discounts.”

Merrill Lynch from Bank of America, also highlighted the same thing, saying that the telecom operator might realign its contract with the equipment providers to keep just a single company per circle on the task instead of 2-3 per circle. The executive also said that the telco might accomplish this in the coming one and one-and-a-half month.