This development follows the submission of additional documents by Chinese equipment manufacturers, including Huawei and ZTE, to the National Security Council Secretariat (NSCS) in their pursuit of the coveted “trusted source” tag. This designation is a prerequisite for being considered eligible to provide telecom network gear for new contracts.
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Chinese telecom giant ZTE, which reportedly received government approval, has been granted the opportunity to supply Vodafone Idea (Vi) with optical transmission equipment worth over Rs 200 crore for an extensive network upgrade project.
Sources reveal that NSCS granted the green light for Vi’s deal with ZTE after the Indian telecom operator furnished the required documents and clarified that the project constituted an expansion and upgrade of the existing network, rather than a completely fresh contract. The upgrade will specifically target the circles of Gujarat, Maharashtra, and Madhya Pradesh-Chhattisgarh (MP-CG), where Huawei equipment is currently in place. However, ZTE will exclusively handle the expansion work.
An official explained that Vi qualified for an exemption as it involved the upgradation of an existing network. The telecom operator promptly informed the authorities about the deal and effectively addressed various queries. The report suggests that this Vi-ZTE deal could potentially be the largest for the Chinese telecom equipment maker since the intense border clash between India and China in 2020. In April, it was already reported that Vi had awarded ZTE a network gear order amounting to nearly Rs 200 crore.
Given the government’s 33.4 percent stake in Vi, making it the largest shareholder in the financially troubled telecom company, it is noteworthy that Vi successfully completed a debt-to-equity conversion of Rs 16,133 crore, which included the payment of interest earlier this year.
In June 2021, the Trusted Telecom Portal was introduced by the Indian government to safeguard the country’s networks. As part of this directive, operators were mandated to procure equipment only from trusted sources and ensure that such gear is labeled as a “trusted product.” Notably, this directive does not affect annual maintenance contracts or updates to existing networks. Chinese companies have been primarily responsible for maintenance work on the 4G networks of Bharti Airtel and Vi.
On the other hand, crisis-hit Vi faced setbacks when European telecom majors Nokia and Ericsson declined the company’s request for supplying 5G equipment on credit. Both manufacturers conveyed to Vi that they could fulfill the order only upon receiving the upfront payment. Vi, which already owes vendors an outstanding sum of Rs 3,500-4,000 crore, continues to make partial payments, but clearing the total dues remains a distant objective.
