Ending some long-drawn uncertainty, the Indian government has allowed Chinese telecom gear maker Huawei to take part in forthcoming 5G trials.
The trials will be held in January and the telecom department was to meet operators on December 31 to confirm the timing, CNBC TV18 reported, quoting Indian telecom officials.
Telecom Minister Ravi Shankar Prasad said: “We have taken a decision to give 5G spectrum for trials to all players.” An in-principle decision had been taken in this regard, Prasad said at an event in New Delhi. The auction of 5G airwaves is expected to take place in March.
For Indian telecom companies, the government’s green signal for Huawei is good news as its telecom gear is cheaper and more cost-efficient than European rivals such as Nokia and Ericsson. The prevailing uncertainty around Huawei had made them somewhat wary of entering into deals with the Chinese company.
Chinese leader Xi Jinping had pressed his Indian counterpart, Prime Minister Narendra Modi, to allow Huawei to take part in the trials during the Mamallapuram informal summit held a few months ago. Xi told Modi that cutting out Huawei under US pressure would be detrimental for the bilateral relationship, top sources told Asia Times.
Over the years Huawei’s attractive pricing and relatively relaxed payment terms made it popular among Indian telecom companies. It offers payment terms over two to three-year spans, while its European rivals quote higher rates and demand payments at the point of deployment.
The government has been delaying taking a decision on allowing or banning Huawei from the test runs amid a US-led push to shut out the Chinese firm, saying its gear contained “back doors” that would enable China to spy on other countries. Beijing denies such a plan.
The US has also claimed that Huawei’s owners have close links with the Chinese military, a charge the company has denied. The US has been warning other countries about relying on the Chinese telecom player for their 5G networks.
The US government has put Huawei on the entity list, forcing American companies to sever their business ties with the company. After Google severed ties, the Chinese company could not use the Android operating system, which includes apps such as Play Store, Maps and Gmail.
Later other US tech giants such as Qualcomm, WiFi Alliance, SD Alliance, ARM and Intel also had to fall in line and adhere to the US administration ruling.
Countries such as Australia and New Zealand have banned Huawei from 5G trials. The UK’s British Telecom said it would phase out Huawei tech from its existing 4G network by 2021, and not use it in 5G core networks.
Huawei has been keen to take part in 5G airwaves auction in India, the world’s second-biggest wireless market by users. The company even expressed a willingness to sign a “no back-door” agreement with the Indian government when concerns were being raised over a potential ban.
Beijing also warned New Delhi that there could be “reverse sanctions” on Indian firms doing business in China if Huawei was barred.
Also Read: China talks tough with India over Huawei
Although the Indian government is keen to usher in 5G technology and meet the timelines for trials and the auction of the airwaves, industry watchers wonder whether the telecom companies have the requisite financial bandwidth.
The three-year price war, unleashed by Reliance Jio Infocomm, took a heavy toll on the telecom sector with many companies winding up their operations. The only two survivors, Bharti Airtel and Vodafone Idea, have very stressed balance sheets.
The Indian telecom industry’s cumulative debt is estimated to be more than 7 trillion rupees (US$98 billion). A recent Supreme Court judgment increasing the purview of adjusted gross revenue for payment of spectrum charges has added to their burden.
Even Reliance Jio, promoted by India’s richest man Mukesh Ambani, is looking to trim its debts. Mukesh Ambani is reportedly trying to offset his telecom debt burden by selling a stake in his petroleum venture to Saudi Aramco.
Also Read: India’s Reliance deal with Aramco hits a hurdle
The auction prices set by the Indian telecom department is also being seen as prohibitive. It has set a base price of 4.92 billion rupees ($69 million) per megahertz, while in South Korea, the same band was priced at about 1.31 billion rupees ($18.3 million) in auctions held in June 2018.
In addition, the telecom companies also face the problem of insufficient quantum of 5G spectrum on offer. Initially, the Telecom Regulatory Authority of India stated that 300 MHz of the spectrum would be available for the three operators.
But later it had to give away 25Mhz to the space department and 100Mhz to the defense department. Now the three telecom firms will have to make do with 175 MHz, which will work out to less than 60 MHz per operator.
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