Samsung clinches 1st supply deal with Vodafone Idea

Samsung Electronics Co. is set to supply $720 million worth of mobile network equipment to Vodafone Idea Ltd. in a contract that marks its first supply deal with the third-largest telecom company in India and a move to 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 combined $3.6 billion in contracts with Samsung Electronics, Ericsson and Nokia to purchase 4th- and 5th-generation network equipment over the next three years.

With the deal, Samsung will become a new vendor for the Indian mobile service operator, accounting for 20% of the supply. Ericsson and Nokia each claim 40% of the contract.

Samsung is expected to begin shipments to Vodafone as early as the fourth quarter of this year, according to industry sources.

In the filing, Vodafone Idea said the vendor agreements 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 aggressively expanding mobile networks to narrow its gap with first and second-largest competitors Jio and 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, which has been scaling back operations.

In June, Samsung Networks Business division transferred several hundred of the 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, early this month Samsung Networks appointed Everth Flores, until recently the CEO at Ericsson Netherlands, as vice president and head of Samsung Networks Europe.

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 Nokia Oyj's mobile network business. Nokia denied the report.

Write to Jeong-Soo Hwang at hjs@hankyung.com
 


Yeonhee Kim edited this article.