Single vendor to manage RCom services for $3 bn

Ericsson, Alcatel, Huawei, ZTE in fray for five-year contract

In what would be one of the largest managed service outsourcing deals in telecom, Reliance Communications (RCom) has shortlisted top vendors Ericsson, Alcatel-Lucent, Huawei Technologies and ZTE for a $3-billion five-year contract.

Unlike other players, such as Airtel or Vodafone, who use multi-party vendors for managed services, RCom has decided to give the contract worth nearly Rs 15,000 crore to a single vendor.

The deal would entail outsourcing end-to-end management services, including operational planning of the network (which most companies keep with themselves), management and maintenance of GSM, CDMA and wireline networks, fibre, utilities, internet protocol and field assurance (quality control). Only IT services and customer services will be kept out of the contract. Decisions on new roll-outs will remain in-house.

The contract is expected to be finalised within four-five weeks. Those in the know say the deal could entail the transfer of a substantial part of the 15,000 employees on RCom rolls to the vendor that wins the contract. Discussions are said to be on to fix the number.

An RCom spokesperson declined to comment on the issue. Alcatel, Huawei and Ericsson declined to comment or did not reply to queries.

Currently, RCom has a 50:50 joint venture (JV) with Alcatel-Lucent, announced in 2008 for managed services. Apart from RCom, the company was meant to cater to other operators across the world. However, the domain for which the four vendors have been shortlisted would be much larger and the Alcatel-Lucent JV would be just one of the contenders.

RCom will pull out of its Alcatel-Lucent JV if it is not selected for the new deal. RCom has decided not to go for a JV model with the selected outsourcing partner.

The integrated outsourcing contract will help RCom reduce its cost 15-20 per cent, experts say. Discussions are on with the shortlisted vendors to provide site-wise (tower-wise) network performance rather than the current overall network performance parameters. That should improve quality standards.

The managed services model was pioneered in India by Bharti Airtel, which signed long-term contracts with Ericsson, Nokia Siemens Network and Huawei for 2G and 3G services. Bharti also has an outsourcing deal with IBM for comprehensive IT solutions for a few years.

Vodafone India has two vendors, Ericsson and Nokia Siemens Networks, with which it has long-term managed service contracts.