China’s ZTE Gets Government Nod To Supply Equipment Worth Rs 200 Crore To Vodafone Idea

Chinese equipment maker ZTE has received the government’s approval to supply optical transmission equipment worth over Rs 200 crore to Vodafone Idea (VI) for a network upgradation project. 

Another Chinese company Huawei has also filed additional documents to the National Security Council Secretariat (NSCS) for getting approval as a ‘trusted source,’ reported the Economic Times. It is a pre-requisite for becoming eligible to provide telecom network equipment under new contracts.

Vodafone Idea’s contract worth Rs 200 crore with ZTE got NSCS approval after the telecom company submitted documents and clarified that it’s an upgradation project for the existing network, and not a fresh contract, according to the report, citing a government official.

The upgradation is for Gujarat, Maharashtra and Madhya Pradesh-Chhattisgarh (MP-CG) circles. The networks in these circles have equipment from Huawei but the expansion work will be done only by ZTE.

"Since it's an upgradation of the existing network, Vi was eligible for exemption. They have informed us about the deal and clarified some questions," the Economic Times quoted the government official as saying.

VI-ZTE deal was possibly the largest for the Chinese telecom gearmaker since the most violent border clash since the India-China border clash in Galwan in 2020.

The Indian government is the largest shareholder in the troubled telecom operator after it finished the debt-to-equity conversion in the company of its Rs 16,133 crore interest due early in the year. 

Several reports surfaced in April this year that VI awarded a network equipment contract worth Rs 200 crore to ZTE. 

In June 2021, the Centre released the Trusted Telecom Portal to guard networks in the country and the security approval was part of the directive that said that operators could only purchase equipment from trusted sources and equipment marked as a “trusted product’. However, the directive does not affect annual maintenance contracts or updates to the existing network. 

European telecom firms Nokia and Ericsson have rejected VI’s request to supply 5G equipment on credit.