Ericsson, Nokia leave India's Vodafone Idea in lurch – report

Vodafone Idea looks to purchase 5G gear on credit, but European vendors Nokia and Ericsson are unlikely to cooperate.

Gagandeep Kaur, Contributing Editor

June 30, 2023

2 Min Read

Ericsson, Nokia leave India's Vodafone Idea in lurch – report

The Indian operator risks losing customers if it cannot launch 5G.(Source: Amlan Mathur / Alamy Stock Photo)

Ericsson and Nokia have decided not to give 5G equipment on credit to Vodafone Idea, India's third-largest service provider, according to media reports.This is mainly because Vodafone Idea is yet to clear its past dues and because of the precarious state of its finances. While Vodafone Idea has made some partial payments to the vendors, it is not close to clearing total dues of between 35 billion Indian rupees (US$426.5 million) and INR40 billion ($487.45 million). That makes vendor reluctance to start new lines of credit understandable.But it puts Vodafone Idea in a tricky situation as it needs to meet some minimum rollout obligations before September 2023 to retain spectrum licenses, under government rules.Vodafone Idea's debt at the end of March 2023 was about INR2 trillion ($24.36 billion). More importantly, its efforts to attract investors have not yielded results in the last three years. Media reports suggest it is in advanced talks with several private equity funds to raise INR200 ($2.4 billion), but it remains unclear when this could happen.With no funds in sight, and Nokia and Ericsson unwilling to extend credit, Vodafone Idea is unlikely to be able to launch 5G services soon. The risk is that it continues to lose subscribers and market share to rivals already deploying 5G.It is unclear if other vendors, such as Samsung, have also decided not to work with Vodafone Idea on credit.Is ZTE the knight in shining armor?While all this has been happening, China's ZTE has been allowed to provide optical transmission gear worth INR2 billion ($24.36 million) to Vodafone Idea, despite government restrictions on Chinese suppliers. ZTE was acceptable, in this instance, because it is upgrading an existing network and not building a new one, according to media reports.Neither Huawei nor ZTE have been able to participate in the 5G market in India because the government has refused to give them "trusted source" certification. It is now mandatory for Indian telcos to work only with vendors that have this status.It remains to be seen if this deal between ZTE and Vodafone Idea opens the door for the service provider to acquire 5G gear from the Chinese vendor. If that happens, it would allow Vodafone Idea to acquire 5G equipment at cheaper rates and also, possibly, under better payment terms – with ZTE looking to make an Indian comeback.Related posts:Why Indian telcos are building 5G at breakneck speedIndia's Vodafone Idea hands $28M optical deal to ZTE – reportsIndia’s Vodafone Idea gets a government assist— Gagandeep Kaur, contributing editor, special to Light Reading

About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

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Ericsson, Nokia leave India's Vodafone Idea in lurch – report

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