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Huawei Wants India to Remove Hurdles for 5G Spectrum

Huawei has been present in India since the last decade in the telecom equipment business and has so far worked with Airtel and BSNL

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Huawei
A staff member stands in front of a Huawei shop in Beijing, China, March 7, 2019. VOA

Chinese telecom equipment major Huawei on Tuesday said that India should address the constraints in the spectrum availability to make 5G technology-based services a success in the country.

Speaking to IANS on the sidelines of the Huawei Global Analysts Summit 2019 here Huawei Executive Director David Wang, who is also the company’s ICT strategy head, also pointed out that the Indian telecom market is currently faced with excess competition.

“Huawei would like to see India become more attractive in terms of 5G. We hope to see more changes in the Indian market..there is lack of spectrum for 5G operators which could affect the services. If the constraints present in the 4G is there in 5G as well, then these constraints might hamper growth,” Wang said.

Huawei Deputy Chairman Ken Hu said some of the growth irritants of 4G in India should not be repeated. These problems had made it difficult for telcos to make profits with the 4G spectrum in the face of excessive competition in the telecom services market.

“If operators are struggling to make profits under 4G, I wonder how will they become profitable in 5G. Competition in Indian market is overheated”, Ken said.

“My personal view is that for a very long time after 4G deployment, eMBB will be the main scenario. If operators are already struggling to gain profits on eMBB scenario under 4G, then I wonder how do they make profits under 5G””, he added.

eMBB, or enhanced Mobile Broadband, is one of the three sets of used cases defined for 5G.

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FILE – A woman stands at the booth of Huawei featuring 5G technology at the PT Expo in Beijing, China, Sept. 28, 2018. VOA

Huawei which has faced security concerns in some parts of Europe and in the US, said that it is already in the Indian government’s invitee list for 5G trials, as and when these take place.

“We were invited by the Indian government last year to conduct field trials for 5G and also participated in used cases and researches with operators in India. Huawei is deeply engaged with the Indian market on 5G,” Wang said.

“India is similar to China and other growing markets in terms of requirements and ICT and is an important market for us”, he added.

Huawei has undertaken 5G demo trials, alongwith Airtel and Reliance Jio, at the Indian Mobile Congress.

India’s Department of Telecom so far has not taken any decision on the time period for 5G trials as the telecom operators have differences over the quantum of spectrum to be allotted and the duration of the field exercise.

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While the operators demand a one-year minimum period for trial, the government says it only allot spectrum for 90-day trials.

The Indian telecom services market is facing severe competition, with a tariff war unleashed by Reliance Jio already affecting telcos’ bottomlines. They are already complaining about the high high reserve price of the next spe4ctrum auction slated to take place later this year.

Huawei has been present in India since the last decade in the telecom equipment business and has so far worked with Airtel and BSNL. It faces completion from fellow Chinese rival ZTE, Korean major Samsung, and the European firms Ericsson and Nokia. (IANS)

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India Grapples with Credit Issues

While the framework utilised by the rating agencies that has led to a delay in ratings relaying the correct credit information to market participants

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India, Credit, Issues
Recent news whereby credit downgrades have just preceded defaults by Non-Banking Financial Companies (NBFCs) is a case in point. Pixabay

As India grapples with credit issues, one of the primary factors that needs analysis is the broken transmission mechanism that relays credit quality to market participants. In common parlance, the transmission mechanism that provides information regarding the credit quality of the borrower to the lenders is unable to do so efficiently. Recent news whereby credit downgrades have just preceded defaults by Non-Banking Financial Companies (NBFCs) is a case in point.

While the framework utilised by the rating agencies that has led to a delay in ratings relaying the correct credit information to market participants is partially to blame for the inefficacious credit transmission mechanism, issues around rating agencies are only part of the problem. For sure, rating agency regulations must be improved, but we must also realise that “credit market frameworks” are much more than ratings.

We must realise that credit ratings have limitations in terms of predicting credit cycle ups and downs. This phenomenon isn’t limited to just India but is a global feature. The inability of the credit rating mechanism to adequately price in and predict the credit cycle implies that a multi-pronged approach is needed to ensure that the credit quality transmission mechanism works effectively. Essentially, India needs to develop other features of the credit market that will assist market participants in gauging credit quality, thereby reducing the risk of a “jump-to-default” scenario we have witnessed repeatedly over the last 12 months.

Indian policymakers need to start working on a framework that will allow a liquid and deep secondary market to develop in credit products. Credit products here refers to the entire universe of lending, including bonds, loans and other instruments. Market pricing of products and risk and therefore increased participation by investors will help in “price discovery” of the credit quality. Constant pricing of credit risk and the concomitant information and structure that entails will imply that lenders will have a better information set with which to make informed credit decisions.

India, Credit, Issues
As India grapples with credit issues, one of the primary factors that needs analysis is the broken transmission mechanism that relays credit quality to market participants. In common parlance, the transmission mechanism that provides information regarding the credit quality of the borrower. Pixabay

A market that allows for secondary liquidity, albeit even small amounts to start with, will also incentivise borrowers to manage their credit profile better. More importantly, a secondary market for credit instruments will go a long way towards avoiding the bunching of credit as it happens in today’s market. A credit market has a cycle, and without the existence of a robust secondary market, in expansionary credit cycles, poor quality credit gets excessive access to capital. On the contrary, once the credit cycle contracts credit access for all businesses is diminished to a great extent.

We must work towards breaking the above trend that has plagued the Indian economy significantly. A secondary market for credit instruments will incentivise both lenders and borrowers to behave in a way such that the entire available pool of credit goes towards the most optimal usage.

Policymakers also need to start utilising vehicles similar to Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs) to allow for the pooling of credit instruments. While debt mutual funds exist in the market, the aim of the new “credit pooling vehicles” will be to enable institutional investors to access credit instruments across the spectrum, and not just limited to certain corporate bonds. Access to vehicles that allow for greater liquidity and transparency will go a long way in increasing the capital availability and investor participation in Indian credit markets.

As India looks to boost economic growth, it is essential to realise the credit interlinkages in the economy. To boost exports, a primary aim in India, credit access will be a vital component, if not the most important. If credit is constrained by inefficiencies in the credit information transmission mechanism and therefore leads to inefficient lending in the real estate sector, then it is essential to realise that not only is the real estate sector severely affected but so are other areas such as exports. Primarily, an improved credit framework will lead to both higher availability of capital and credit availability at more affordable rates.

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Credit markets, like all businesses, will move in cycles. Indian policymakers must aim to start building on the blocks that will allow credit downturns to be less severe and shorter. The ability to provide the market access to better information and investment structures will go a long way in improving credit pricing, and thereby credit access. (IANS)