Nokia-Siemens gets edge in BSNL bid The coming together of Nokia and Siemens AG's telecom equipment businesses has happened at a time when Bharat Sanchar Nigam Ltd (BSNL)has received bids for 45 million mobile lines, which is clearly the largest deal underway
Nokia-Siemens gets edge in BSNL bid
Our Economy Bureau / New Delhi June 20, 2006
The coming together of Nokia and Siemens AG's telecom equipment businesses has happened at a time when Bharat Sanchar Nigam Ltd (BSNL)has received bids for 45 million mobile lines, which is clearly the largest deal underway.
While a private operator like Bharti Airtel is believed to have chosen Ericsson recently for an equally massive order, the key impact of the deal will be on BSNL.
Bharti and BSNL are contracting to buy 1.2 billion lines, in a market that has just over 100 million cellphones and adds over 4 million every month to be the fastest growing globally.
This is unlike elsewhere in the world, where major markets have already reached saturation point. Of the five companies in the fray for the 45 million line BSNL order - Nokia, Ericsson, Motorola, Siemens and Chinese company ZTE - two have come together.
Aman Kapoor, senior analyst, Packetology LLC, a US based research and analysis firm, said there was every likelihood that the combined Nokia-Siemens entity may be able to get a higher share of the contract and put pressure on market leader Ericsson and challenger ZTE.
Kapoor said he believed the primary purpose of Nokia-Siemens was to lower costs. "The combined entity may be able to get a higher share of the contract. It also broadens the product portfolio, making it another one source supplier that offers wireline and wireless network products. The new entity is also an attempt to compete with Ericsson and the about to be merged Lucent-Alcatel," he said.
Another key impact is on Nokia, traditionally seen as a handset company. Its equipment division Nokia Networks has been steadily winning business in India over the past few years and will now be a force for Ericsson to reckon with in India.
Other analysts believe the merger is likely to spark a new global wave of consolidation and a round of price wars.
The deal will create the world's third-largest network equipment concern behind Ericsson and a combined Lucent and Alcatel.
The transaction is also likely to put considerable pressure on Motorola, which will be reduced to the fourth position as network equipment maker in the world, as a time when its business is turning around as a result of its hot-selling Razr cell phones.
For Siemens it makes eminent sense to partner with Nokia. The German multinational has already sold its cellphone handset division to BenQ of Taiwan over a year ago. |
