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Published on December 18th, 2006 | by Babar Bhatti


Telecom Politics in Asia

The Indian telecom market is again the topic of a political discussion about security and foreign telecommunication and technology firms. Recently the Chinese telecom equipment firms ZTE and Huawei were the issue but now Orascom has joined the list. Pakistan is a common link for all these companies.

As reported in Indian press here, the Egyptian telecom giant Orascom wants to pick up direct stake in Indian telecom companies. Currently, the company holds an indirect 10% stake in Hutch-Essar.

Orascom was being scrutinised by Indian Intelligence agencies since it was a key mobile player in Pakistan. CEO Naguib Sawaris says he needs more clarity on the government’s FDI policy. “The security issue surprises me, just because we operate in Pakistan does not mean our company becomes a threat to any nation’s security,” Sawaris added.

Orascom had sparked off the debate on the security issue of FDI from countries, percieved to be a threat to India. The debate within the government continues.

For a review of ZTE and Huawei with India see this Business Week blog. Excerpts below:

Indian telecom operator BSNL disqualified the Chinese company from bidding for contract worth $4 billion for GSM equipment. The Indian government, through the Foreign Investment Promotion Board, had also prevented Huawei and ZTE from expanding their small presence in India.

Both Huawei and ZTE early this month won some business from state-owned operators. And now comes news that ZTE is teaming up with an Indian partner. The Shenzhen-based company plans on working with MCorpGlobal, according to the Economic Times, “to set up a service-based company, which will import, distribute and sell telecom equipment and also offer other telecom-related services in India.”

Clearly this is a setback for ZTE, which no doubt would have much preferred to stick with its original plan of going it alone in India.

It would be good for all 3 countries – China, India and Pakistan – to clarify such matters of security and investment rules in detail so that foreign companies can invest with confidence. The rules of 21st century blur the geographical borders faced in the past by global businesses and telecommunication technology is at the forefront of this push. There’s not much to be gained by pushing back.

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