Samsung Electronics Co. will supply $720 million worth of mobile network equipment to Vodafone Idea Ltd. in a contract that marked its first supply deal with the third-largest telecom company in India and would shore up Samsung’s underperforming mobile networks division.
Vodafone Idea said in a filing to the National Stock Exchange of India on Sunday that it has signed a total of $3.6 billion contracts with Samsung Electronics, Ericsson and Nokia to purchase 4th and 5th-generation network equipment over the next three years.
With the deal, Samsung became the Indian mobile service operator’s new vendor, accounting for 20% of the supply. Ericsson and Nokia each claim 40% of the contract.
Samsung is expected to begin the shipment to Vodafone as early as the fourth quarter of this year, according to industry sources.
In the filing, Vodafone Idea said the agreement with the vendors marked “the first step towards the rollout of the company’s transformative three-year capex plan of $6.6 billion.” Its CEO Akshaya Moondra stated: “We are pleased to start our new partnership with Samsung,” the Mobile World Live, a media outlet, reported on Monday.
The Indian company aims to take 4G population coverage from 1.03 billion to 1.2 billion, launch 5G in key markets and expand capacity to meet data growth, according to the Mobile World Live.
SAMSUNG NETWORK BUSINESS IN RESTRUCTURING
Vodafone Idea is aggressive in expanding mobile networks to narrow its gap with first and second-largest competitors Jio ad Bharti Airtel in the country.
Its facility expansion is expected to lead to additional supply deals with Samsung and prop up the South Korean company’s mobile network business that has been scaling back operations.
In June, Samsung Networks Business division transferred several hundreds of some 4,000 employees based in its headquarters to other business divisions. Its revenue tumbled 30% to 3.78 trillion won ($2.8 billion) on-year in 2023.
Samsung is the world’s largest smartphone maker by shipment. But it is the fifth-largest player among the world’s telecom equipment suppliers with a mere 2% share as of 2023, according to Dell’Oro Group, a telecommunications industry tracker.
To rejuvenate its business, Samsung Networks has appointed Everth Flores, until recently the CEO at Ericsson Netherlands, as a vice president and head of Samsung Networks Europe, early this month.
In January last year, Samsung hired two former executives of Ericsson, including Henrik Jansson, formerly Ericsson’s sourcing manager.
Last month, Bloomberg reported that Samsung expressed interest in the mobile networks business of Nokia Oyj. Nokia denied the report.
By Jeong-Soo Hwang
hjs@hankyung.com
Yeonhee Kim edited this article
