5G implementation is significantly different from the previous telecom rollouts.
First, all the telecom companies are trying for indigenous development of the 5G network – hardware and software. For this purpose, Reliance has announced that it would enter the telecom 5G network business to meet the requirements of its firm Jio and to sell its network to other international players. Airtel is partnering with TCS to produce 5G networks. All the Indian telecom players want to end the domination of Finland's Nokia, Sweden’s Ericsson, and Korea’s Samsung in the telecom network industry. Make in India incentives by the Indian governments are an additional factor pushing these developments. Since almost 70% of the telecom technology rollout is composed of the networking equipment cost, doing this will help the firms to control costs.
Another factor that encourages firms to invest in technology is the recent development and adoption of the open RAN platform (ORAN), which is open source. So far, such an open-source alternative has not been available, causing lock-ins with vendors such as Nokia and Siemens for repairs and upgrades. ORAN will be vendor-neutral and hence can prevent vendor lock-ins. For Indian companies, this gives a golden opportunity to tie up with local small firms and play the role of super integrators. And this is what Reliance and Airtel are up to.
However, Indian firms who have established technology working in these domains are rising to the occasion and clinching deals. One such firms is ITI Limited, which is involved in the same business of producing network gear. ITI Limited is a government-owned telecommunications technology company that began as a departmental unit in 1948. The company has manufacturing units in Bengaluru, Naini, Rae Bareli, Mankapur, and Palakkad, as well as an R&D center in Bengaluru and 25 marketing, services, and projects (MSP) centers across India, including Bengaluru, Bhubaneshwar, Chennai, Hyderabad, Kolkata, Lucknow, Mumbai, New Delhi, and 17 other cities. ITI has a dedicated network system unit for executing turnkey projects for the installation and commissioning of communications networks, in addition to providing telecom turnkey solutions and personalized support. The company plans to improve and invest in technology by acquiring it from strategic partners, with a particular focus on high-growth industrial categories. The company has a data center in Bengaluru that is currently growing to provide cloud-based services to government agencies, banks, and other businesses.
As the lone local player in the industry with experience in producing network gear, we would have expected them to be part of these partnerships by the biggest telecom players such as Reliance Jio and Airtel. Though ITI has announced some deals with TechMahindra to produce 5G technologies, it would be better to rise to the occasion and clinch better deals with telecom providers itself. If both Reliance and Airtel are going to produce technology indigenously, they may not be purchasing technology from outside. Ideally, I would expect ITI to enter a deal with either Reliance, Airtel, VI, or all of them fast as their preferred network gear producer.