Telecom customer base of Samsung Networks primarily resides in developed markets. To gain scale in the LTE industry the company is increasingly competing for deals in emerging markets, including India.
In H2 2014 Samsung was revealed as greenfield operator Reliance Jio Infocomm’s LTE base station supplier. The 2014 contract included orders for between 50,000 and 70,000 base stations. Samsung had previously delivered on a contract for 60,000 LTE base stations.
Reliance Jio Infocomm, which holds spectrum licenses in the 1800MHz band across 14 circles and licenses in the 2.3GHz band across all 22 circles, will launch LTE services in 2015.
Like Reliance Jio Infocomm, Samsung is an upstart within India’s telecom market. With the successful launch of Reliance’s LTE services, Samsung will demonstrate its ability to compete with Huawei, Nokia and Ericsson for contracts from incumbent operators Idea, Bharti Airtel and Vodafone India.
Unlike the country’s 3G build out, Samsung will be a significant player in India’s LTE investment cycle.
India presents several opportunities for Samsung to grow revenue within the next two years. In March the Indian government completed its latest spectrum auction, which is likely to spur investment by the country’s largest operators in the short and long term, while delaying investment for smaller operators saddled with too much debt from record high spectrum prices. LTE investment in the country remains slow, but with 4G subscribers expected to double to 15 million this year, India will need to focus on releasing additional spectrum within the next two years.
Revenue growth dipped due to a lack of contract wins in mid-2014, but new contracts in LTE and next-generation technologies will boost growth in Q2 2015.
Samsung Networks regained customer momentum in the last eight months following a quiet period in the middle of 2014. Samsung added India’s Reliance Jio as an LTE customer and added customer wins with KT and SK Telecom in South Korea for new technologies such as eMBMS and NFV, respectively.
In addition, Samsung continues to receive revenue from Sprint’s Spark TD-LTE buildout, participation in Vodafone’s Project Spring, and small cell contracts. Samsung Networks grew 1.8 percent year-to-year in Q1 2015.
Samsung’s ability to prove its technology with carriers in South Korea – one of the most advanced telecom markets in the world – will help the vendor win deals in other countries. This strategy paid off in the LTE investment cycle, when Samsung leveraged LTE RAN success in South Korea into contracts in the U.S.
Samsung is revamping its relatively weak OSS portfolio through partnerships and internal investment. Samsung significantly lags its competition in telecom software, but took steps to improve its perception and technology with the launch of the CognitiV OSS portfolio in March.
Currently, the portfolio consists of Samsung’s Smart SON self-optimizing network solution, the CognitiV Cloud Manager to manage virtualized network elements, and CognitiV Analytics, which collects data in real-time and leverages algorithms to provide data and video traffic congestion solutions. The company will eventually add network management and SDN solutions to the portfolio. Samsung is leveraging IBM for the OSS elements it lacks and Guavus for additional analytics.
Samsung appears to have no interest in building out its BSS portfolio, consistent with Alcatel-Lucent, which deemphasized BSS, and Nokia, which divested its BSS assets. Samsung is relying on its in-house professional services, including systems integration, to deliver CognitiV OSS, despite its relative lack of experience in this area.
While CognitiV OSS is an important first step, Samsung’s lack of systems integration expertise and small install base of customers to which it can upsell these solutions does not position the portfolio strongly against Huawei and Ericsson.
Michael Soper, telecom analyst at Technology Business Research