Vodafone Idea From India Signs 28 Million US Dollars Contract With ZTE

Vodafone Idea has awarded a contract for optical network equipment worth INR 2.3 billion ($28 million) to Chinese supplier ZTE, according to Indian media reports. The device will apparently be used in the telecom circle (service area) of Gujarat, Maharashtra and Madhya Pradesh-Chhattisgarh (MP-CG).

This may be the only new contract awarded to a Chinese supplier in the past two years since the Indian government made it mandatory for telecom companies to purchase equipment and services only from suppliers with "trusted source" certification. ZTE and Huawei, being Chinese companies, have not yet obtained the required certification. It's also why they haven't been able to get any 5G deals.

Certification does not appear to be an issue for large companies from outside China, including Ericsson and Nokia (Europe) and Samsung (Korea).

Telcos also need approval from the National Security Council Secretariat (NSCS), which manages the Trusted Source Portal, before they can start working with any vendor. According to media reports, Vodafone Idea has notified NSCS and made corresponding demands.

ZTE is attractive to Vodafone Idea because Vodafone Idea has huge debts and needs the best value for money deal to upgrade and modernize its network. It is also the only telco in India that has yet to launch 5G services. The company has been losing customers due to a lack of 5G service and is under pressure to improve its network.

It is not the only telco dealing with Chinese suppliers either. Last year, Bharti Airtel awarded Huawei a 1.5 billion Indian rupees ($18.3 million) National Long Distance (NLD) network expansion contract and a separate maintenance contract. But the deal between ZTE and Vodafone Idea would be brand new, with expansion and maintenance agreements exempt from NSCS jurisdiction.