Nokia bags Bharti’s $275 m contract

MUMBAI: Bharti Tele-Ventures has signed a deal to outsource the operation and maintenance of part of its network to Nokia for $275 million over three years.

Bharti aims to focus entirely on core areas, such as product innovation, services, marketing and pricing, to make more from its seven million-plus mobile customers in one of the world's fastest-growing markets.

"The productivity gain from allowing an expert to manage the network will be major, though it would be difficult to quantify," Viresh Dayal, corporate director of business development at Bharti, informed on the sidelines of a news conference.

Bharti, 28-percent-owned by Singapore Telecommunications Ltd, now operates in 16 of 23 circles that make up India's mobile market, which is forecast to expand to at least 100 million users by 2005 from about, 35 million now.

Bharti plans to start services in the other seven circles by the end of December.

Its agreement with Finland's Nokia, the world's largest mobile phone maker, covers five circles, Mumbai, Maharashtra and Goa, and Gujarat, where it already has services and Bihar and Jharkhand, and Orissa, where it will start soon.

Bharti has a similar deal with Sweden's Ericsson worth more than $400 million, announced in February, for network management in 15 other circles.

"We are exploring similar tie-ups for the remaining three circles," Dayal said.

Analysts say India's mobile user base is expanding faster than firms' ability to add capacity, leading to congestion.

With Nokia, Bharti will raise capacity in advance based on expected demand, yet only pay Nokia as customers sign up for and utilise services, an arrangement Dayal said would improve cash flows.

The size of the deal represents Bharti's minimum commitment to Nokia.

"The actual figure could be higher if the market grows faster (than projected)," Bharti President Manoj Kohli told the news conference.

Nokia will take on 100 Bharti employees as part of the agreement to deploy up to five times the current network capacity in the next two years in the five circles, Bharti said in a statement.

Bharti also plans to deploy EDGE (enhanced data rates for global evolution) technology in Mumbai, Pune and Ahmedabad in the first phase.

This technology allows data to be transferred at faster rates, enabling streaming video and other Internet-based multimedia services on the networks.

©Reuters