In a note to clients Lehman analyst Alan Hellawell projects which equipment players will benefit from Indian mobile growth:
Noting that Indian GSM operators added 3.5mn subs in Jan'06, up from 3.1mn in Dec'05 and the H205 average of 2.7mn; we have significantly lifted our mobile penetration forecasts for India from 19.2% to 22.6% by March, 2009. As part of this hike in subscriber forecasts, we also see increasing pressure on capex outlays by India's operators. We note that the major suppliers to Bharti are Ericsson and Nokia. Ericsson and Nokia have contracts with Bharti consisting of both network rollouts and network management. Further all capex payments to vendors are made on an erlang basis instead of per sub basis. Payments are also made on a network capacity utilization basis rather than immediately after the network rollout. Hutchison's key network supplier in India presently is Nokia. Hutch however also goes for annual vendor bids to ensure pricing remains most competitive. Recently Hutch has also outsourced the network management function for nine of its provinces to Nokia in a bid to cut costs. Chinese vendors such as ZTE and Huawei meanwhile may have more limited prospects... We believe their impact commercially has been largely in terms of bringing down equipment pricing, with outright equipment contract wins still few.