On its third quarter earnings call this week Nokia CEO Pekka Lundmark noted that the company has recently signed some significant contracts in India. He said Nokia was awarded a contract with Bharti Airtel for a 45% share of its planned 5G network as part of a continuing relationship with that carrier. On top of that, Nokia this week announced a deal with Reliance Jio, where it will be a major supplier for Jio’s planned 5G network deployments.

“As you know, we have not been a radio access supplier to Reliance Jio previously, so this is a very meaningful new customer engagement for us and an important market share gain,” said Lundmark. Nokia was not involved with Jio for the rollout of its 4G radio network business.

Although Nokia is not specifying its market share for Jio’s 5G network, Lundmark said, “It is a meaningful market share. It’s not a small piece. So, this represents a significant volume potential for us.”

In addition to RAN growth for the Finnish vendor Lundmark said its relationships in India could also be significant for “pull-through” into optical network opportunities.

He did note that it is a well-known fact that the India market is highly competitive, and that will put pressure on gross margins for any contracts. But on the other hand, the India market also offers huge volumes and scale.

India opportunity for RAN vendors

According to new analysis from the research firm Dell’Oro Group, India accounted for only 4% to 5% of global radio access network (RAN) revenues in 2021.

But with India now in full swing rolling out 5G, RAN revenues in the country will jump.

Dell’Oro analyst and Vice President Stefan Pongratz said that 5G rollouts in India are expected to be intense, especially over the next 18 months. Reliance Jio and Bharti Airtel are targeting nationwide 5G by the end of 2023 and early 2024, respectively. “We estimate Samsung was the largest Indian RAN vendor in the 4G era,” said Pongratz. “Based on preliminary contract awards announced by Bharti Airtel and Reliance Jio, it is possible that Nokia and Ericsson will gain share and lead in the 5G transition.”

He agreed with Lundmark’s comments about the low margins in the Indian telecom market offset by the high volumes.

According to Dell’Oro, India 4G macro base stations accounted for 20% to 25% of global volume. Dell’Oro estimates total wireless operator revenue in India was about $24 billion in 2021, which implies an average revenue per user (ARPU) of less than $2 per month. This compares to global average ARPU of about $10 per month, and U.S. average ARPU of about $60 per month.

Indian wireless subscribers totalled about 1.15 billion or around 14% of global wireless subscribers in 2021, according to the Ericsson Mobility Report and the Indian government group TRAI.

Pongratz said the key thing about the Indian market is that even if the margins are tough and prices are low, it’s a very important market to be participating in because fixed penetration is so poor. He said less than 10% of homes have fixed broadband.

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