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How Does Bharti Airtel Fit in to Ericsson’s Growth Strategy?

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Ericsson, Bharti Airtel deal

Earlier in this series, we saw that Ericsson (ERIC) is looking to tap India’s (EPI) market potential in mobile broadband. The company has recently entered into a four-year deal with Indian telecom (telecommunication) provider Bharti Airtel to deploy 3G (third generation) and 4G (fourth generation) networks in various cities in India. 3G and 4G are two types of mobile broadband Internet access.

The move comes as Indian telecom operators invest heavily in 3G and 4G technology. As seen in the above chart, the combined 3G and 4G subscriber base in India is expected to grow by 31% between 2013 and 2017.

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How will Ericsson support Bharti Airtel?

For 4G, Ericsson will deploy an LTE (Long-Term Evolution) network in Delhi, providing Airtel subscribers access to faster web browsing, video-on-demand, downloads, and other services. LTE is a 4G wireless communication technology.

For 3G, Ericsson will deploy a 3G WCDMA (Wideband Code Division Multiple Access) network across eight telecom circles in India. WCDMA is a 3G wireless technology that improves broadband speed.

Meanwhile, Airtel is also collaborating with China Mobile (CHL) to set up a 4G LTE ecosystem and develop mobile technology standards.

Indian telecoms compete for 4G

Bharti Airtel was the first to launch 4G service in India. Reliance Jio Infocomm plans to launch its 4G services by the end of 2015. Recently, Vodafone India (VOD) announced plans to launch its 4G service ahead of Reliance Jio by the end of 2015.

Consulting firm Analysys Mason estimates that Indian telecom operators will spend $4–$4.5 billion on 4G deployment in 2014–2015. This amount is expected to increase annually by about 10% for the next two to three years.

According to Nokia (NOK), presently there are 73 new 4G networks planned for India for the year 2016. This is a good opportunity for network equipment providers. Ericsson will face tough competition from Nokia, which secured the highest number of 4G LTE contracts in India in 2014.

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