The network outsourcing contract, which will last for eight years and is valued at more than $1bn, will see Alcatel-Lucent manage Reliance’s mobile and fixed communication networks in the east and south of India.
Reliance hopes that the deal will help it cut costs and improve efficiencies, while it also builds on a previous joint venture in which Alcatel managed Reliance’s nationwide mobile network in a five-year $750m deal.
According to data from the sector regulator Reliance has a customer base of around 134 million, but has debt amounting to $7bn.
As part of the deal, around 4,000 of the Indian company’s employees will move to Alcatel-Lucent, according to Gurdeep Singh, chief executive of Reliance Communications’ wireless business.
Alexander Peterc, analyst at Exane BNP Paribas, told Reuters that this was “mild good news for Alcatel’s services business, which is currently in attrition mode as it tries to weed out unprofitable contracts, but the company still needs to replace missing business with fresh and healthier backlog”.
