South Korean gear maker Samsung is facing challenges to grow its telecom network business in India after ending its exclusive network contract with Reliance Jio last year. It has reportedly laid off around 400 employees in India in the absence of any new meaningful network project from Jio this year.
The prospects of getting any big contract from Jio is unlikely for Samsung, especially after Mukesh Ambani announced Jio’s foray as the telecom equipment maker with its own homegrown technology and solutions.
The company, however, is trying hard to get network business from older telcos, Bharti Airtel and Vodafone Idea, having already initiated talks for 4G and 5G technologies.
Analysts previously suggested that Samsung could be in a position to gain new business in India after the global controversy around Huawei broke out last year as older Indian telcos were looking to find options beyond European vendors Nokia and Ericsson.
Local industry executives, however, believe that Samsung will have to largely rely on its only partner, Reliance Jio, to get new business, which will largely be around 4G.
The Korean company is currently the largest 4G equipment provider in India due to its deal with Reliance Jio, which has deployed more 4G sites than Airtel and Vodafone Idea combined. Samsung is the sole 4G equipment vendor for Jio.
According to reports, Samsung had earlier this year made its intentions clear about going beyond Jio after it sought tender for state-run BSNL’s nationwide 4G network. While the tender has been scrapped after a controversy over Chinese vendors like ZTE and UTStarcom, Samsung is still interested in getting some share of the state-run telco’s 4G network, which will have 50,000 new 4G sites.
The Indian government is currently exploring the possibility of coming up with a system integrator model for BSNL’s pan-India 4G network. Reports suggest that Samsung may partner with an Indian IT company which will bid for the BSNL 4G contract while the Korean company can provide wireless equipment.
“Though Jio’s focus on developing in-house capabilities for 5G, especially on the 5G software-side will impact Samsung’s role in Jio’s 5G deployment, Jio might still rely on third-party vendors (most likely Samsung given its long-relationship) for 5G hardware,” Ashwinder Sethi, Principal at Analysys Mason was quoted as saying by the Economic Times.
He, however, added that getting any business from older telcos will be very tough for Samsung as it doesn’t offer products for legacy 2G and 3G technologies.
Airtel and Vodafone Idea will end up increasing their overall network deployment cost if they decide to choose Samsung for their network expansion.
“A single RAN BTS is cheaper from an equipment perspective and also occupies less space on the site, thereby leading to lower tower rentals. So. Samsung might be more costly because operators will need some 2G equipment from another vendor if they are buying 4G from Samsung,” Sethi added.
Samsung’s hopes are still alive with Reliance Jio in the 5G space. Jio had applied for 5G trials with Samsung along with Nokia, Huawei and Ericsson, but had also submitted an application to conduct trials using its own 5G technology.
A report by Bank of America Merrill Lynch recently said that Jio may depend on Samsung for 5G equipment, which will be backward compatible with its 4G network.
According to a report by Dell’Oro, Samsung is the world’s fourth-largest 5G equipment maker behind Huawei, Ericsson of Sweden and Nokia of Finland.