Outsourcing back on the agenda for Indian telcos

Dylan Bushell-Embling
Telecom Asia

Indian carriers are set for another round of outsourcing.

MTNL has issued tenders for the management of its 3G and Wimax operations while Bharti Airtel is considering outsourcing its fiber network. MTNL says it is seeking a multinational operator to run its 3G network. Participants must have at least one million 3G customers in at least two countries, and a minimum bi-annual turnover of $30 million.

Bidders must also be registered in India or have a presence there, but must not operate telecom services in regions where MTNL has 3G operations. The winner will provide end-to-end 3G services, including billing, customer care and marketing, for a 10-year term. It must commit to earning over 300 million rupees ($6.1 million) after the first year of operation, and 2.4 billion rupees after three years.

The state-owned broadband and wireless carrier runs 3G networks in Delhi and Mumbai, but has managed to attract only around 1,000 subscribers. MTNL is also seeking a partner to run its Wimax network. Bidders or their parent companies must be a Wimax technology OEM or a systems integrator with a Wimax manufacturer partnership.

The winner must sign up at least 50,000 users within the first year of operations, and 400,000 by the fourth.  MTNL and the winner will likewise enter into a revenue sharing arrangement, but this time MTNL will handle billing based on information provided by franchisees.

Rival Bharti Airtel is meanwhile is looking to outsource the management of its inter-city fiber network, according to the Economic Times. The company, which has already contracted out the management of its mobile networks and IT back-end, is in talks with several major companies over the contract, according to an executive.

The most likely candidate - which would cover over 80,000 km of cable - is the joint venture between Airtel and Alcatel-Lucent, in which Airtel holds a 26% stake.

Ovum analyst Matt Walker said these deals make sense in the context of India's telecom market. "The trend of carriers outsourcing more of their operations in India started several years ago," he said.

"If vendors are better at the technology/network side of the business, and are willing to serve as partners in this element of the business, then it's a mutually beneficial proposition for a carrier like Bharti to outsource it."  More outsourcing deals are on the horizon, Walker said, and not just in India. "Carriers are looking to cut costs and compete only on what they're good at, and vendors are eager to do more than just sell hardware, and morph into services and applications."  
 

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