Airtel Awards Telecom Infra Expansion Contract Worth 300 Cr to Huawei

Huawei has obtained a contract from Airtel to expand the latter's telecom infra across the country, sources privy to the matter have said.  More importantly, this deal is said to be worth INR 300 Crores, making it one of the largest scale deals of its kind so far this year.

The Premise of the Deal

Incidentally, Airtel is looking to replace its National Long Distance network and this deal is part of the same. The importance of NLD optical transport network is such that it is one of the core infrastructural parts of a telco. This is because it is used to carry inter-circle and international traffic. Furthermore, NLD also helps manage the network capacity and carries internet traffic and traffic from main landing stations. Reportedly, Airtel has already placed a PO with Huawei for the equipment.

The contract comes as a reprieve for Huawei. The Chinese company denied any wrongdoings and allegations. Yet, it is uncertain of the future. With the deployment of 5G around the corner, it must be heaving a great sigh of relief. Interestingly, Sunil Mittal has backed Huawei in the past. He has publicly called its 3G and 4G products better than its those of its European rivals.

Airtel and Huawei - Amidst the Border Dispute

The Chinese telco equipment and mobile maker are under a lot of pressure. The Sino-Indian border dispute is a key factor. Coupled with the sanctions forced by US due to alleged espionage on behalf of the Chinese State and Huawei has seen their business from India dwindle. To make matters even worse, Airtel recently replaced their equipment with that of their European counterparts in two circles around the country.  This deal however expresses a sense of trust in the Chinese equipment maker.

India's second largest telco floated a request for proposal, or RFP, to the European companies such as Nokia as well. While Huawei might rejoice, Airtel needs to give proper explanations behind its reasons to go with the Chinese company.

More importantly, this deal can explode in Airtel's face as other telcos can target them for going with a Chinese supplier. Airtel are treading fine margins with this deal.

In the midst of all this, the government is making a list of ‘trusted sources’ under the National Security Directive. The move is to keep Chinese equipment makers such as Huawei and ZTE out of India’s 5G. Incidentally, it is in line with the US and the UK which have taken steps to bar them from critical infrastructure.

Finally, It remains to be seen how Center will react to this development. Airtel has chosen quality over potential bad press, which is a sensible call by all means. However, the deal's effects will be visible later.