Battle for 5G: Our gear not costlier than Huawei's, say European firms

Companies' message to the govt is meant to assuage fears that any ban on Huawei could escalate equipment cost

European telecom gear manufacturers have assured the Department of Telecommunications (DoT) that the price at which they sell equipment in India is almost at the same level as their Chinese competitors.  This comes at a time when Huawei, historically considered a less expensive option than others for sourcing telecom equipment, is under attack globally following the trade war between the US and China.

European equipment firms’ message to the government is meant to assuage fears that any ban on Huawei could escalate telecom equipment cost for operators in the country. They are learnt to have also indicated that there’s no basis to assume that the European firms wouldn’t supply upgrades of 5G network technology to Indian vendors that may put them under a serious disadvantage.  

The US government has been pushing allies including India to ban Chinese firms in the 5G telecom equipment space. US secretary of state Michael Pompeo, who’s visiting India end of this month, is expected to take up the issue.

While the DoT has announced trial runs for 5G within 100 days, there’s no clarity yet on whether Huawei would be allowed to participate or not. Ericsson, Nokia and Samsung are among those getting ready for the trial.

The US has alleged that Huawei used spyware in its equipment to snoop in countries, an allegation which it has denied.

A senior executive working with an European telecom gear manufacturing company said: “DoT had a few questions--one on price competitiveness and another on availability of future 5G technology. We have advised them that our price is at par with the Chinese.’’

The executive also pointed out that international gear makers have requested the ministry that while examining their submission on price, they should look at not only the purchase order but also the agreement in which discounts, maintenance terms, credit lines and others are spelt out. Telcos have raised concerns that without the Chinese, competition in the telecom gear business will get stifled,  pushing up prices for the equipment and thereby impacting their financials. Without Huawei and ZTE, vendors would be mainly limited to only Ericsson, Nokia, Samsung amongst some others.

Cellular Operators Association of India Director General Rajan Matthew has argued that the Chinese equipment are 5 to 15 per cent cheaper than the gears sold by other competitors. 

The Chinese firms also offer long-term attractive credit lines at LIBOR, making payments easier, he said. European gear manufacturers admit they cannot offer such credit lines as European banks do not support them. 

“Yes, Chinese banks subsidise the Chinese equipment players. However, there is a risk which was clearly evident when China Development Bank sued RCom for non-payment of loans and they might relook at this arrangement,’’said a senior executive of an European telecom equipment company.  

Battle for 5G hots up

 

• European telcos have told government that the price of their equipment is near par with the Chinese players and will remain the same with 5G
• Telcos have raised concerns that any ban on Chinese would lead to stifling of competition and increase in price of 5G equipment 
• European telcos have assured that they will offer any upgrades of 5G technology without restrictions 
• US secretary of state Michael Pompeo will come to India on June 5 and the issue on China is expected to crop up 
• DoT has said it will decide soon on whether to allow Huawei for 5G trials and it is looking at the security angle