The discounts offered by vendors like Nokia and Ericsson are intended to make the most from India’s large telecom subscriber base
Indian telecom giants, including Reliance Jio, Bharti Airtel and Vodafone Idea, have sealed deals with vendors like Nokia and Ericsson for sourcing network equipment. The contracts signed by the giants are a huge bargain, as the prices for sourcing the equipment are significantly lower by 30 to 40 per cent compared to global costs, according to the Economic Times.
“Pricing for equipment in India and China is usually a 35-40 per cent discount for comparable technology stack in markets like the Middle East, Europe and North Americas,” Ashwinder Sethi, partner at global TMT consulting firm Analysys Mason, told the Economic Times. This is largely because India has a huge telecom subscriber base is around 1.21 billion, second to China’s 1.77 billion.
“This, of course, is a factor of scale, and the need for vendors to keep up the revenue momentum from growth markets like India when other key geographies are muted,” he added.
Additionally, these vendors have seen a stark decrease in their revenues in the first half of 2024. Ericsson’s revenue fell 11 per cent to $10.7 billion, Nokia’s by 21 per cent to $9.9 billion and Samsung’s network division sales came down by 31 per cent to $1.1 billion.
This is another reason why they are eyeing markets like India with huge subscribers.
Moreover, fast deployment of the 5G network in India and rapid market expansion are reasons why India is an attractive option for the vendors. According to a report by Astute Analytica, the Indian 5G market was valued at $7,065 million in 2022 and is projected to reach $1,78,546.1 million by 2031.
Another report by Ericsson revealed the number of 5G-enabled handsets in India is expected to grow to 144 million by 2025.
“While the 5G rollouts have stabilised in the country, given the rapid rollout and expansion of last year, we do, however, expect 5G adoption in India to grow, given the strong data demand in the country and the digitalisation initiatives by enterprises,” said Nitin Bansal Ericsson India Managing Director, according to a PTI report. He added that India continues to be a strategic market for us and the second-largest market for Ericsson.