Bharti Airtel has awarded a telecom infrastructure expansion contract worth around Rs. 300 crore to embattled Chinese gear major Huawei, multiple people aware of the development said.
"This is kind of a deal which is considered massive in this space. Airtel has already issued a procurement order (PO) to Huawei," a senior executive working with Huawei's rival company told ET. "...the value of this deal is a major part of Airtel's overall capex budget for non-radio network."
The deal is part of an ongoing Airtel process to expand its National Long Distance (NLD) network which is currently run by Huawei. NLD optical transport network is considered to be crucial as it carries inter-circle and international traffic and helps manage the network capacity. It also carries internet traffic and traffic from main landing stations.
Huawei and Airtel didn’t respond to ET’s emailed queries.
The contract comes as a respite for the Chinese company which is facing huge uncertainty over its continued involvement in the Indian telecom market, especially its participation in the upcoming 5G network deployments in the country, due to allegations of its involvement in cyber-snooping on behalf of the Chinese state. Huawei has denied any wrongdoing.
The pressure on Huawei has increased over the last year or so amidst escalating Sino-Indian border tensions and question marks over its supply chain given US sanctions. In this backdrop, Huawei has been losing meaningful wireless business from even Bharti Airtel over the last 15-18 months with India’s second largest telco replacing it with European vendors in two circles.
But equally, Bharti Airtel Chairman Sunil Mittal has backed Huawei in the past, publicly called its 3G and 4G products better than its those of its European rivals rivals.
The latest deal was finalised at a time when Airtel had floated a request for proposal (RFP) with other vendors like Nokia, Ciena and Infinera for the NLD network.
"The RFP is on to replace Huawei's NLD network. And, now Airtel has given a big contract to Huawei, while this RFP is still on…," another senior industry executive closer to the process said.
The deal also comes at a time when the Indian government is preparing a list of ‘trusted sources’ under the National Security Directive for acquiring equipment for telecom networks. Experts said the move was aimed at keeping Chinese equipment makers Huawei and ZTE out of India’s 5G deployments, in line with the US and the UK which have taken steps to bar them from critical infrastructure.
But one of Huawei’s rivals warned India’s telcos of looking at short term gains by awarding the contract to the Chinese vendor.
"India should not risk its critical telecom infrastructure again. India runs a risk of again going back to Chinese vendors or short-term cost benefits. As the border dispute situation de-escalates between India and China, India companies may rush to embrace Chinese vendors which could be a long-term issue," a third executive said.
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