The Hindu Business Line : Reliance close to deal with Alcatel Lucent

New Delhi May 20 Reliance Communication has finalised a deal with Alcatel-Lucent for supply of Code Division Multiple Access (CDMA) equipment used for offering mobile services. This is the first major contract Alcatel-Lucent will be getting from India after the merger of French major Alcatel with US equipment vendor Lucent.

Lucent had earlier supplied CDMA equipment to Reliance in 2004. The deal size is estimated at around $350 million and will be officially announced shortly, according to industry sources.

While both Reliance and Alcatel-Lucent officials said that talks were on between the two companies, they did not comment on the final shape of the deal. The two sides have been negotiating the contract over the past few weeks.

Expansion plans

The contract will enable Reliance to undertake its major expansion plans involving over 20,000 towers across the country. The company has said that it will invest close to $2.5 billion in 2007-08 in expanding its telecom network to more number of towns and cities across the country. The company is also looking to launch new services, including direct-to-home and Internet Protocol Television by third quarter of the next fiscal. Currently, Reliance is the number two cellular firm in terms of subscribers and is adding close to a million new users a month.

The huge growth in the Indian cellular user base has made the telecom market very lucrative for equipment vendors.

While BSNL is all set to award a $4.5-billion contract to Ericsson and Nokia-Siemens, Idea Cellular recently announced a $500-million deal with Nokia-Siemens. Bharti is also spending close to $2.5 billion this fiscal in order to expand its network. Alcatel-Lucent is also getting a $1.5-billion contract from BSNL for supply of GSM mobile equipment. The large capacity enhancements from operators have prompted vendors including Ericsson and Nokia Siemens to set up manufacturing base in the country. The competition among vendors is so high that some of the manufacturers who have not been able to make inroads are offering equipment at less than $70 a line.

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