Vodafone Idea had awarded an “add-on” contract of worth Rs 400-450 crore to Huawei Chinese gear maker for wireless and wireline network upgradation, just before the March 10 government notice amending the telecommunication licenses, mandating the use of equipment only from trusted sources from June 15, 2021.
Huawei though has been accomplishing only limited equipment deliveries as the Indian telco already owes some Rs850 crore to the Chinese vendor, people familiar with the matter stated.
Vodafone Idea and Huawei denied any of the new contract signing between two sides this year. But sources mentioned the latest contracts were not the new ones, but additional ones for upgradation in circles where Huawei is the existing supplier and were not for core areas of network.
“The new business includes wireless and wireline upgradation including microwave and transport network along with software upgradation. The order was given in March alongside the Airtel-Huawei national long-distance deal,”
mentioned by person familiar with the matter. Another person stated the additional business given to Huawei just weeks before the Department of Telecommunications’ (DoT) notice to amend the telecommunication licenses for the security reasons. The government move is widely believed to be the first step to ensure that Chinese equipment majors such as Huawei and ZTE are not included as telecommunication vendors at a time when the sector is poised for 5G roll out. The two have been kept out of 5G trials in India.
“The contracts given by Airtel and VIL relate to an upgrade of existing equipment in the circles where Huawei is an existing vendor/provider. It was important for operators to allocate this contract before the government came out with the list of trusted vendors so that they could future proof their networks in circles where Huawei is the vendor,” Ashwinder Sethi said. “Huawei doesn’t want more money to get stuck with Vodafone Idea because of its current financial position. They are delivering against small purchase orders as and when VIL clears some of the payment for previous orders,” he also added.
Vodafone Idea CTO Jagbir Singh mentioned- in March it will continue to work with the Chinese vendors Huawei and ZTE for its radio and transport network expansion for coverage and capacity needs but only in circles where Chinese vendors already serve the telco. He though added that telco won’t give any new contracts to the Chinese vendors.