Local players should coexist with the multinational companies in the telecom sector in India, according to Sanjay Malik, Senior VP & Head, India Market, Nokia. He added that both can fulfil different roles in the sector.

Malik in a telephonic interview with BusinessLine shared his views regarding the ‘Make in India’ campaign from the perspective of the telecom sector and Nokia’s role in it.

The Nokia India head also discussed the future of the sector, emphasizing on the need for 5G in India. Excerpts here:

A recent BSNL tender to buy 4G gear was put on hold because the government wanted to give Indian manufacturers a chance to bid for the contract. Do you think Indian manufacturers have the ability to offer world-class products?

From a BSNL perspective, in terms of the local manufacturing matter, I think it will take quite a long time to have those products even if the local manufacturers or the local vendors in India want to do it. It’s going to take a long time. It's not easy, and it is going to take a big investment into that.

BSNL’s requirement is for revival and the requirements for 4G is now. With that requirement, if you are not able to even launch 4G services, then it would be again a challenge for BSNL.

I would go for the coexistence of all the MNCs is in India, and the local players, the local manufacturers. A large R&D investment goes into this telecom product. If it is such kind of large investment, then we have to have a global scale.

If you look at it, about seven, eight years back, we used to have about seven to eight players from the telecom manufacturing side, and now we are left to four to five. There is a big consolidation which has happened. If you don't have a scale, then it is very difficult to survive with that kind of investment.

But then there are quite a few other fields which are attached to these telecom products. Some of the peripheral things which will be required from the 5G ecosystem, or making some of the use cases work. So that is one space where the Indian manufacturers now should take the leap.

Can we be entirely local in terms of manufacturing of network equipment? What are your recommendations on expanding local manufacturing in India?

The local vendor debate is more about R&D, more about developing those products, from a software and hardware perspective, then getting a scale-out of it. An R&D budget will definitely help from the policy side, but then that budget should be spent in an intelligent way. Spend it on future technologies which will help you in getting a global scale. It is better to have more innovation in new fields and new technology. They can have better profitability in that.

From the government perspective, they have to enable this vertical integration of the whole ecosystem. So, whether it is a component, whether it is a semiconductor or whether it is a chip, I think they have to attract more and more manufacturers in that segment to India, which they are doing. From our perspective, we would be happy if the local components are available with the same quality and with a better cost.

What are your views on ‘Make in India’? What are Nokia’s plans for the Indian market?

‘Making in India’ should be seen as how much value do you create for India. We have been doing that for a while now. We have our manufacturing facility in Chennai. All the radio equipment, which gets supplied in India comes from that factory. Even on the export side, the same factory has been building the equipment for exporting to advanced countries.

We have about 16,000 plus people who are working here. We also have a large R&D base in Bangalore, where we have about 6000 plus people We have also incubated 30 start-ups.

We do business with all the four operators, and we have an end-to-end portfolio here for the telecom sector. It gives us quite a few opportunities that we have been willing to use and we will continue to enhance our position in the India market.

Are Nokia factories in India back to full operation yet?

Based on all the guidance from authorities, it was stalled for some time. But now it is back on track. And we are ramping up quite fast. We are making sure that all the guidance and all the directives from authorities are adhered to. So we are maintaining the social distance and maintaining all the other measures which are required. We have started manufacturing.

Telecom operators are still under a lot of stress. Will upgrading network to 5G be an expensive proposition and can telcos take this burden now?

India, as a country, should start moving towards 5G. From the spectrum auction perspective, because of Covid and because of the financial health of the sector, maybe the 5G auction takes place sometime in the of 2021. And then by the end of 2021, maybe or towards the second half of 2021, we start seeing some 5G commercial launches. From the sector perspective, we have seen that the underlying performance has been improving each year.

The spectrum auction is one thing that the policymakers will have to see and have the right pricing on that as per the global standards.

I’m hopeful that the AGR solution would also be found quite quickly. Industry talk is happening about tariff adjustment and other things. I would say the telecom sector will start coming back on track.

From the network operation perspective, I would say that's not the biggest investment which operators will have to make in the sense that whatever 4G equipment which we are giving now, it is upgradeable to 5G. And then part of the 4G capex investment which happens now, that will move towards 5G.

I think the stress would be more on how do we take care of the spectrum fee and what should be the right spectrum charges. The whole industry has to move towards 5G in India.

What are your recommendations for BSNL?

From a policy perspective, the government really moved fast in coming out with that revival package. But, if the policy framework came so fast, I think it should be executed also fast.

We did get into this unfortunate situation of Covid. Before that, the speed of execution or speed of implementation of all those measures was going quite well. If BSNL has to compete in this world, with the likes of other telecom operators in India, then it has to move fast for coming out with these 4G services.

As part of the Phase-8 eight tender, BSNL had the provision that they can purchase 100 per cent more expansions out of that tender itself. Let's call it as an expansion tender. That was also part of the product offering which all of us gave. And for that tender Nokia was competing.

If they have to move fast one of the ways would to go ahead with this expansion tender. From a Nokia perspective, also, we can help them in launching 4G services in four to five months, and start earning revenue on it. But before that, they have to clear all the dues which are there with us. We have been in discussion with BSNL and other authorities on clearing these dues.

I think the time is of the essence. This will give them the best time to market. Other operators have used this (Covid-19) as an opportunity to increase their business.

Data usage is growing exponentially. The lockdown has aided this. With WFH being a reality going forward, does Nokia see any change in the networks as planned? Will there be more focus on providing a fixed wireless experience than a mobile one

With working work from home and with the new normal which is coming up, fibre to home is going to become very important. Even in the fibre to home space, 65 per cent of the homes are connected to one of the Nokia. We have clear leadership there.

How do you see 5G adoption panning out from a consumer perspective?

5G will have both the markets, the consumer market and the enterprise market. For the operators, I think the enterprise market would be much more attractive. From a consumer perspective, I think it was the same question when we moved from 3G to 4G.

India has adopted 4G. My view is that from an India market perspective, where the consumption of data is so huge and it keeps on growing month over month, it will be a supply and demand situation. If the supply is there, demand will be there. If 5G provides better experience better, better use cases, better data speeds, better latency, I think adoption would be fast and again on the handset side or on the side of the devices, we see that the ecosystem is building up. The 5G device prices will start coming down when we approach the launch of 5G in India.

Will 5G impact the fixed-line broadband business? If yes, how?

I think both will act as complimentary services. 5G will be wherever fibre will not be. India has a large gap in hybridisation as of now So, the number of homes which have been covered by fibre is again much lower. So there is a lot of space which is available for increasing this fiberization. So some part of that will be covered by fibre, and maybe another part will be covered by 5G.

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