Telecom equipment providers like Ericsson, Huawei bled last year due to gov policy

The big players of telecom equipment industry, Ericsson, Huawei, Nokia Siemens and ZTE saw their India revenues take a big hit in the last financial year due to the controversy over security standards and ‘trap doors’ in Indian telecom equipment last year.

Total sales of telecom equipment to mobile operators fell by a drastic 24% during the last financial year despite most companies starting their roll-out of 3G services. The total wireless operator equipment market was just Rs 18,629 crore compared to Rs 24,440 crore in the previous year of 2009-10, the Voice & Data annual survey revealed.

The biggest hit has been taken by the Swedish wireless equipment-maker Ericsson which saw revenues plummet almost 30% to just Rs 6,173 crore ($1.4 billion), the survey, based on market intelligence, said. The numbers are not endorsed by the respective companies, who typically decline to reveal their India sales figures.

The second biggest loser was the Chinese network equipment-maker Huawei, which was targeted by the government claiming that it had links with the Chinese Army and some of its equipment may have ‘trap-doors’ that can be used to leak conversations and data from India to China.

Huawei, which was supposed to emerge as the biggest winner of contracts from Indian operators rolling out 3G networks, instead came out posting a 24% decline in revenues to Rs 5,688 crore. It’s compatriot from China, ZTE, too saw a decline of 12.8% in revenues to Rs 4,118 crore.

It is reported that most operators chose to postpone their big orders for 3G and 2G networks, instead of purchasing them from expensive providers like Ericsson and Nokia Siemens Networks. This year, as a result, the market is likely to bounce back. Nokia Siemens Networks managed to more or less hold on to its business, slipping just 5% to Rs 6,177 crore.

“The telecom infrastructure industry failed to bag orders in view of the security concerns raised by the government,” said Ibrahim Ahmed, Group Editor of Voice&Data.

Only those firms which have an exposure to the consumer market in the form of mobile-phones, such as Samsung, managed to grow.