Nokia Ahead In Race For Reliance Cellular Deal

The deal has swung in favour of Nokia following its decision to match the financial bid of Alcatel, telecom sources say. The French major had surprised the telecom industry by quoting about $100 million (Rs 345 crore) for seven mobile switching centres (the equivalent of exchanges in mobile networks) and setting up the network on a turnkey basis.

Competitors like Siemens, Ericsson, Nortel and Lucent Technologies (previously, AT&T equipment arm) had quoted between $125 million and $180 million (Rs 430 crore - Rs 620 crore) for the project. The offer does not include the cost of inter-city microwave radio links, which is expected to cost another $150 million (Rs 520 crore).

 

The Reliance deal is expected to yield the lowest prices for cellular equipment in India because it is the last deal in the country and due to the large size of the proposed networks. Reliance holds cellular licences for Madhya Pradesh, West Bengal, Orissa, Bihar, Assam, Himachal Pradesh and the North East.

Sources say the vendor financing provided by Nokia or Nortel will be the key to settling the deal. If Nokia can come up with the kind of financing terms that it offered Fascel (an HFCL-led consortium) in Gujarat, it stands a good chance of clinching the deal, a source said.

Nokia had offered 85 per cent suppliers credit to the Fascel project in Gujarat at 1.5 per cent over six-monthly Libor (London Interbank Offered Rate). Moreover, it had arranged a commercial loan for the remaining 15 per cent from the Finnish exim bank at very fine rates.

The details of the Nokia offer to Reliance were not available. Sources say the dealworked out in other circles had a built-in moratorium of three-four years.