Up for grabs: Bharti’s $2b deal

India’s largest mobile company Bharti Airtel’s over $2-billion network outsourcing contract will be up for grabs soon. With its current multi-billion-dollar network outsourcing deals with equipment majors Ericsson and Nokia Siemens Networks (NSN) up for renewal next year, the telco will start inviting bids from global equipment vendors in the next couple of months. According to people familiar with developments at Bharti Airtel, Ericsson and NSN will not be guaranteed an automatic extension, and will have to compete with other potential bidders.

Industry executives point out that incumbent Ericsson and NSN remain favourites to win the deals, but Bharti’s decision to invite bids also presents an opportunity for other equipment vendors, such as Huawei, ZTE and Alcatel-Lucent, to bid for one of the largest networks management contracts globally. Significantly, Chinese equipment vendors will be participating for the first time.

Bharti has some experience of working with other equipment vendors. The telco had earlier awarded the contract to build, maintain and manage its networks in Sri Lanka to Chinese equipment major Huawei.

Franco-American telecom gearmaker Alcatel-Lucent has also emerged as a strong player in India, having bagged a series of contracts recently. Last year, it bagged a managed services deal with Reliance Communications, covering the latter’s GSM and CDMA networks. Last week, Alcatel-Lucent formed a $500-million JV with Bharti to manage its landline and broadband networks.

Bharti Airtel has been one of the pioneers in outsourcing its infrastructure and IT systems. In fact, its multi-billion-dollar deals with Ericsson and NSN as well as its IT outsourcing deal with IBM were perhaps the first such deals signed anywhere in the world. Sweden’s Ericsson manages Bharti’s networks in 15 of the total 22 telecom circles while the rest are handled by NSN.