RCom JVs with Alcatel-Lucent to provide managed network services

The joint venture is expected to generate $450-500 million of revenues in 5-7 years

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The Anil Dhirubhai Ambani (ADA) Group company will hold 33 percent stake in the venture while the remaining stake will be held by Alcatel-Lucent.

"Combining the unique strengths of Alcatel-Lucent and Reliance Communications, the joint venture company would foray in the fast growing $16 billion Managed Network Services industry and will cater to telecom operators, both CDMA and GSM, across the globe," a joint statement released by the companies said.

"The first assignment of this joint venture will be to provide Managed services for Reliance Communications nationwide CDMA & GSM networks in India," it added.

According to Sandip Biswas, head (managed network), Reliance Communications, the biggest challenge being faced by all telecom operators "is to continuously improve competitiveness by reducing operating expenditure and enhancing network quality to provide superior customer experience."

The joint venture, "an unmatched blend of leadership in technology, innovation, scale of operations and customer service," will address this challenge, he said.

Agrees Andy Williams, president of Alcatel-Lucent's services business. "This partnership confirms our trusted partner relationship with Reliance Communications and reinforces Alcatel-Lucent's position as a strong and competitive managed services provider," Williams said.

"We will be building on the existing operational and multi-vendor capabilities to drive this innovative business model, which is a unique partnership between a leading service provider and a leading vendor in the telecom space," said Vivek Mohan, managing director, Alcatel-Lucent India.

While Reliance Communications will be represented by its wholly owned subsidiary in the joint venture, Alcatel-Lucent will have operational control, the release said.

The joint venture's first contract, valued at $450-500 million, will be to provide managed services for Reliance Communications' CDMA and GSM networks in 12 circles in the north and western parts of India. "We are aiming to set up nationwide GSM and CDMA network by fiscal end, which will cover 23,000 towns and six lakh (0.6 million) villages serving 97 percent of the Indian population," a senior company official said, adding the joint venture will help firm up Reliance Communications' expansion plans overseas.

"The joint venture will support the expansion and growth of Reliance Communications, bringing in greater operational efficiency," Biswas said.

This is Alcatel-Lucent's first foray into the MNS market in India. The Indian MNS market, estimated at $7 billion, comprises of services like data integration, VPN (Virtual Private Network) services, network management, performance management, fault management, change management, configuration management, security and application outsourcing.

Reliance Communications is India's only telecom operator offering mobile services in both CDMA and GSM platforms. The flagship company of ADA Group, Reliance Communications, with a market capitalization of $14 billion and a subscriber base of over 48 million, rates among Asia's top 5 most valued telecom companies.

Reliance Communications competes with market leader Bharti Airtel, which, in early 2004, signed a $450 million outsourcing deal with Swedish technology provider Ericsson for managing its cellular network.