As per industry sources, equipment vendors including Nokia, Ericsson, Huawei and ZTE have agreed to longer payment terms as well as lower margins for renewed and fresh equipment contracts signed with Bharti Airtel and Vodafone Idea Limited. The payment terms have been extended from the norm of three-six months to up to three years.
The vendors have reportedly agreed on giving long-term credit to operators in lieu of getting orders.
The move will allow telecom operators to ease immediate pressure on cash flows amidst intense competition. Further, this will allow vendors to indirectly fund both the operators’ 4G capital expenditure, which could stand at about $3-4 billion, over the next two to three years.