TD Newcrest on the dying days of CDMA
Chris Umiastowski wrote a good piece of research last week on his growing belief that CDMA is finished as a viable standard:
“Major Indian CDMA Carrier Building Massive GSM Network?
…highlights the need for Nortel to succeed in 4G Wireless
You may recall that almost exactly one year ago, we published Issue #13 of Dialed In, entitled “The Inevitable Death of CDMA”. It seems every day the evidence stacks up towards that conclusion more and more. Vivo in Brazil appears to be shifting from CDMA to GSM, and Sprint in the USA seems to be focusing on WiMAX.
Today another big piece of news comes at us from India. Reliance Communications is a major CDMA operator in India with 24 million subscribers on its CDMA network. It also owns a small GSM network with 3 million subscribers. But it looks like those numbers are about to change dramatically as Reliance prepares to put to tender a request for 75 million new GSM lines (and up to 25 million new 3G lines). The expected value of this contract is US$7-8 billion
If true, this is a potential negative for CDMA vendors such as Nortel. Now, keep in mind that Nortel doesn’t sell CDMA gear to Reliance as far as we know. But it puts another nail in the coffin of CDMA technology. Once the worlds emphasis shifts far enough away from CDMA, it will be difficult for carriers such as Sprint and Verizon to stick to the technology. Again, this demonstrates the importance for Nortel to succeed in 4G technology such as WiMAX. Any way you slice it, the gravy-train days of fat CDMA margins appear to be limited.
This is likely to be positive for Ericsson and Nokia (who have been dominating the GSM space these days, especially in India), and could be positive for Alcatel-Lucent if they win a piece of the action. I would NOT expect Nortel to be a player in this deal.
Link to the story here: