The Telegraph
Since 1st March, 1999
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Reliance inks $ 100m deal with UTStarcom

Silicon Valley, March 11 (PTI): California-based telecommunications equipment provider UTStarcom Inc is making major inroads into the Indian market with an unannounced sales deal worth more than $ 100 million with Reliance Infocomm, the Silicon Valley Biz Ink reported.

Reliance IndiaMobile is the first mobile service in India that combines voice and data delivery on handsets with computing capabilities. Though UTStarcom, which makes telecom equipment hardware and software, would not comment on the deal, sources said the contract is the company’s single-largest deal. The contract is expected by industry analysts to last three years.

Quoting industry insiders in India, who spoke on condition of anonymity, the publication said that a large project team from UTStarcom this week “is sitting inside Reliance offices in Mumbai”. UTStarcom has sold equipment to Reliance in the past. Deals with Indian companies will fuel future growth of the company.

Last year, China drove more than 80 per cent of UTStarcom’s $ 981.8 million revenues — an increase of 57 per cent from $ 626.8 million in 2001, said CEO Hong Lu.

Yankee Group senior analyst X. J. Wang said UTStarcom’s strategy was very smart. “They focus on emerging markets like China and India ... where they are still buying telecom infrastructure.”

UTStarcom makes wireline broadband internet technology, but leads the wireless personal access system (PAS) market, a technology that enables traditional telephone companies to offer wireless telephone and data services through traditional telephony networks without having to install new cellular networks. PAS phone services resembles cell phones except for a limited coverage area.

Consumers pay about one-third the price of a regular cell phone service for UTStarcom’s cordless PAS service.

Calls have fixed price, rather than the pay-by-the-minute pricing plans for most cell phones, Tim Donovan, UTStarcom director of international marketing, told the Biz Ink.

The cost of installing a PAS network to telephone carriers is roughly half that of a global system for mobile (GSM) communication system, Donovan estimated.

The low-cost, wireless phones also allow consumers to surf the internet, send text messages, play MP3s, take digital photos, play games and use other data-enriched mobile services, including global-positioning-system (GPS) services. UTStarcom, which also manufacturers PAS handsets, already has more than 8 million users in more than 300 cities.

UTStarcom, which earlier this month announced acquisition of CommWorks unit of 3COM Corp for $ 100 million, is already the largest vendor to China Telecom and its other customers include China Netcom, Yahoo! BB in Japan, and Cable and Wireless. But India and China are the two largest potential markets for the company, because they have huge populations, an emerging middle-class and increased purchasing power, synergy research group analyst Stan Zhiyong Zou said.

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