According to Indian media reports, Vodafone Idea has awarded a contract for optical network equipment worth 2.3 billion Indian rupee (28 million US dollars) to ZTE, a Chinese supplier. This device will obviously be used in the telecommunications circles (service areas) of Gujarat, Maharashtra, and Madhya Pradesh Chhattisgarh (MP-CG).
This may be the only new contract awarded to Chinese suppliers in the past two years since the Indian government mandated telecommunications companies to only purchase equipment and services from suppliers with “trusted source” certification. ZTE and Huawei, as Chinese companies, have not yet obtained the required certifications. This is also the reason why they have been unable to obtain any 5G transactions.
For large companies from outside China, including Ericsson, Nokia (Europe), and Samsung (South Korea), certification does not seem to be a problem.
Before starting to collaborate with any supplier, telecommunications companies also need to obtain approval from the Secretariat of the National Security Council (NSCS), which is responsible for managing trusted source portals. Media reports indicate that Vodafone Idea has notified NSCS and made corresponding requirements.
The reason why ZTE is attractive to Vodafone Idea is because Vodafone Idea has huge debt and requires the best value for money transactions to upgrade and modernize its network. It is also the only telecommunications company in India that has not yet launched 5G services. Due to a lack of 5G services, the company has been losing customers and facing pressure to improve its network.
It is not the only telecommunications company that deals with Chinese suppliers. Last year, Bharti Airtel awarded Huawei a 1.5 billion Indian rupee (US $18.3 million) NLD network expansion contract and a separate maintenance contract. But the transaction between ZTE and Vodafone Idea will be brand new, and the expansion and maintenance protocol will be exempt from the jurisdiction of NSCS.
So far, Reliance Jie, India’s largest service provider, is still the only telecommunications company that does not cooperate with Chinese suppliers at all.