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Monday, September 22, 2003

Now It's Nortel on the India-China Trail

Nortel just joined the growing list of companies seeing expansion in China and India as the solution to the growth slowdown in the OECD world.

Nortel Networks Corp, one of the world's largest telecoms gear makers, expects rapid growth from the booming Indian and Chinese mobile phone markets to partly offset tepid global demand, top officials said."The telecom equipment markets globally are still quiet, but good growth is coming out of the Asia region: especially India, China," said Vivian Hudson, president for GSM sales and wireless Internet solutions at Nortel, late on Tuesday.............. Hudson, a 15-year Nortel veteran on her first visit to India, said telecom gear makers are bullish on India, if only because just five out of 100 people have phones.

"India has probably one of the highest capacity requirements in the world just by sheer size of the population, Paris-based Hudson told Reuters in an interview. "There is no question that you will be right up there with the Chinese and other major Western markets." India has more than 16.3 million mobile phone users, and analysts expect the number to surge to at least 100 million by 2008, or about 10 percent of its current population. China is already a much more developed market: It has some 240 million mobile phone users, or about a fifth of its population. One reason for the heady growth projections: India's hotly competitive cellular sector has the world's lowest tariffs at about 1 rupee (2 U.S. cents) a minute.

"The rate structure for wireless in India is very attractive. If its more affordable, more people will get in," Hudson said. The nine-year-old sector will need more than $60 billion this decade to push phone penetration to 15, the current global average, analysts say. Nortel doesn't break down its India business but it reported Asia Pacific wireless revenues jumped 49 percent in the second quarter, the highest gain of any region. Total Asia-Pacific, Latin America and Caribbean sales rose four percent to $467 million, or one fifth of the total -- the only geographical segment to post growth. Limited mobility services that work on CDMA (Code Division Multiple Access) technology and have 3.5 million users are expected to experience even faster growth. The number is rising rapidly as firms now tap smaller cities and rural areas.
"Without a doubt India is the largest unserved market for telecom services in the world," said Ashoka Valia, managing director for Nortel's Indian operations. "India is a clear strategic market for us because of the potential and the opportunity here." India's demand for wireless telecoms gear peaked in 2002 as private firms such as Bharti Tele-Ventures Ltd (BRTI.BO), 16 percent owned by Singapore Telecommunications, state-run Bharat Sanchar Nigam Ltd and the powerful Reliance (RELI.BO) group set up nation-wide telecoms backbones for their services. "Last year was a record year in terms of growth and sales," Valia said. "A key opportunity for Nortel is in the wireless equipment business. We expect it will be one of our growth drivers in India."
Source: Yahoo News

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