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A Journey towards a sustainable future

Samsung gained a lot with its experience with Jio. Before Jio, Samsung was largely unproven when it came to deploying networks outside its home country. Building a vast network for Jio’s 400 million subscribers, gave it the standing it had sought for so long in the telecom equipment industry.

Globally, Samsung controlled 3 percent of the telecom equipment market in 2019, up from 1.5 percent in 2018, according to estimates from Dell’Oro Group.

With its eight-year exclusive contract with Jio having ended in 2020, the company needs another large contract. The manufacturer has been taking a shot at getting BSNL to transition its legacy 2G and 3G networks into 4G LTE networks.

There is a reason that Samsung is on the backfoot here. All operators, apart from Jio, require single RAN technology, where the same base station could be used for 2G, 3G, 4G, and even 5G. Established traditional vendors, including Nokia, Ericsson, Huawei, and ZTE offer single RAN. Samsung doesn’t. A single RAN BTS is cheaper from an equipment perspective and also occupies less space on the site, thereby leading to lower tower rentals. Samsung might be more costly because operators will need some 2G equipment from another vendor, if they are buying 4G from Samsung. As Samsung tries its luck with other telcos, it will need to find a work-around to the challenge that it lacks the technology. It could perhaps offer something noteworthy from a 5G (+4G) perspective such as a much lower total cost of 5G (and 4G) which makes up for the additional cost of 2G from another vendor,

Having said that, Jio may just depend on its 4G gear partner so that its 5G equipment is backward-compatible. With 5G in the offing, Huawei being shut out of many markets, Samsung second only to Huawei in 5G patents, and having one of its biggest 5G deal to date, a USD 6.6-billion five-year contract with US group Verizon in October last year, and other contracts in the US with Sprint, AT&T, and US Cellular, with KDDI in Japan, Telus and Videotron in Canada, and Spark in New Zealand, may find the tide turning in its favor.

Samsung’s innings with Jio

₹ crore

Year Revenues
FY2018 7000
FY2019 7250
FY2020 7500
FY2021 5250
FY2022 3500

The vendor has taken a decision that now is the time to invest heavily – very heavily – in securing its role as a global technology superpower, and has announced its plans to spend 240 trillion Korean won (USD 205 billion) during the next three years on a broad range of sectors, including telecom and specifically 5G/6G, so it can lead the post-Covid industrial restructuring.

With the industry shifting more toward a new era of more IT- and cloud-oriented networking infrastructure, which opens the door for experienced tech players with big pockets to challenge the leading telecom manufacturers, the vendor could be in for an accelerated tectonic shift.

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