Bharti, Ericsson set to ink $1.5b deal

In what will be the biggest network outsourcing and rollout deal globally, Bharti Airtel, India’s largest mobile operator, is set to ink a contract with Swedish telecom major Ericsson estimated to be worth about $1.5 billion. This will be Bharti’s second billion dollar deal with Ericsson in less than a year.

When asked on the issue, a top Bharti executive refused to confirm the deal amount, but said it would be much bigger than the recent network expansion contract with Nokia Siemens, valued at US$ 900 million. “Ericsson discussions are ongoing — we will announce it once we reach an agreement,” the executive added.

Sources said the deal with Ericsson was likely to be spread over a three year period where the Swedish network major will be entrusted with design, planning, supply, installation, commissioning and upgrading of Airtel network in 15 telecom circles. It will also involve implementation and project management, handling of local logistics and materials as well as system integration for the base station sites, in these 15 circles, sources added.

The ownership of the networks built by Ericsson will be with Bharti and the actual payment is linked to utilisation of capacity and fulfilment of agreed quality of service parameters. Besides, the contract will also help Bharti to continue its focus and channel its resources and expertise to its core areas of product innovation, value added services, marketing, branding & pricing, while leveraging Ericsson’s expertise in network management.

This will also mark Bharti’s fourth major outsourcing deal with Ericsson in as many years. In February 2004, Bharti signed a similar agreement with Ericsson valued at over $ 400 million to build and manage networks across 13 circles, followed by a $250 million deal in June 2005 to provide managed services and expand its GSM/GPRS network in 15 circles. Bharti then topped it up with a $1 billion network expansion deal with Ericsson for the same 15 circles in August 2006.