Videocon, Huawei initiate legal action in supply row

Videocon seeks $180 mn in damages Chinese firm claims $150 mn in dues

Videocon has slapped a legal notice on Chinese telecom equipment giant Huawei Technologies, seeking $180 million (about Rs 992 crore) in damages for providing faulty equipment and poor network services.

The move comes even as Huawei says it has sent a legal notice to the Indian consumer electronics to gas and mobile services company for $150 million (about Rs 827 crore) of unpaid dues. Videocon Chairman Venugopal Dhoot confirmed the development and said, “Yes, we have sent a legal notice of $180 million to Huawei for providing us poor network services and equipment.”

Huawei hit back, denying the allegations of having provided poor equipment and services. It confirmed having initiated legal proceedings against the Indian company. “Huawei completely denies all the allegations, including the one related to any kind of faulty supply of equipment or services. It is just an excuse and an after-thought that Videocon seems to have been raising to justify its inability to pay our legitimate overdue payments,” said the legal spokesperson of the company.

“We have full faith in the Indian judicial system, as we have already initiated appropriate legal proceedings in this regard against Videocon,” it added.

Videocon, which bought a majority equity stake in the Mahendra Nahata-promoted Datacom (one of the new players that won a 2G licence), had its licence cancelled by a Supreme Court order. However, unlike most other players such as Etisalat DB or STel, it has continued to provide services and increase its subscriber base even after the court decision. Videocon had entered into an agreement with Huawei for equipment and managed services in three telecom circles of Punjab, Himachal Pradesh and Uttar Pradesh (west) in 2009, according to Huawei. The Chinese equipment giant has been an aggressive player in the market and had also signed contracts with other new players such as Sistema Shyam, Etisalat DB, Loop and STel.

With 6.2 million subscribers, Videocon has 0.92 per cent market share in the GSM space. In May, the company saw its highest growth. It saw subscriber numbers grow 2.17 per cent, just behind Uninor. The company has a reasonable presence in markets such as Tamil Nadu, Haryana, Gujarat and Madhya Pradesh.