ZTE bags $700 million Rel Comm contract

Reliance Communications has awarded a $700 million equipment contract to Chinese telecommunications vendor ZTE Corporation under its proposed GSM foray.

Under the contract, the Chinese company will supply GSM equipment, including base transceiver stations (BTS), receivers, soft switches and other equipment, to the Indian company.

The award is the beginning of the company's GSM plans and Reliance would start getting the equipment after the allocation of spectrum by the ministry of communications and IT, sources close to the development said.

Other companies, such as Huwaei, Alcatel and Motorola, are also believed to be in the fray. This would be only a part of the contract, as the company is planning to float tenders for its extended foray into the GSM segment.

A Reliance Communications spokesperson could not be contacted for confirmation.

ZTE is also believed to have provided technology and equipment to Reliance for conducting beta tests on GSM lines. Reliance is believed to have initiated beta tests in certain circles, even as it is awaiting spectrum allocation to commence full-fledged operations.

ZTE Corporation will provide the technology for conducting trials on either Tata Teleservices' or Reliance Communication's mobile network.

ZTE had earlier signed a joint venture deal with India's MCorpGlobal after the Foreign Investment Promotion Board (FIPB) had rejected its applications to hike investment in the Indian subsidiary.

ZTE had sought to import telecom equipment for wholesale trading in India. MCorpGlobal is a BK Modi group company.

The CDMA major is gearing up to offer GSM services in the country, starting with Delhi and Mumbai, with an initial investment of Rs 2,000 crore.

The Anil Ambani group company is planning a tender of 75 million GSM lines, which is slated to be one of the biggest contracts in the country.

On a sheer size, the tender is much bigger than that of the state-owned telecom behemoth, Bharat Sanchar Nigam Ltd (BSNL), which had recently floated a 45 million GSM line tender.

Reliance is awaiting allocation of 1,800 mhz radio frequency, with the department of telecommunications mulling opening it for commercial use.

The spectrum "" 1,800 mhz "" is currently in possession of the defence forces and is one of the most efficient frequency, as both CDMA and GSM operations can be conducted on this.