RCOM

BANGALORE (Dow Jones)--Indian telecommunications company Reliance Communications Ltd. (532712.BY) is set to award a $500 million equipment supply contract to China's Huawei Technologies Co. (HWI.YY) for R-Com's plan to launch services across India under the global system for mobile communications, or GSM, technology, a person close to the matter said Wednesday.

R-Com still has to award further supply contracts for other GSM equipment.

"Huawei will supply base transceiver stations (BTS) and related equipment to R-Com over a two-year period," the person told Dow Jones Newswires.

"The deal was signed Sunday evening and the paperwork is going on. It'll be announced in a day or two," the person added.

The equipment will cover about 60 million to 70 million GSM lines, the person added.

BTS is the equipment which facilitates wireless communication between user devices and the telecommunications network.

R-Com has recently received spectrum, or radio bandwidth, to run GSM services in 13 areas in addition to the eight in which it already operates. The deal with Huawei will be for the 13 additional areas.

"This is just a part of the supply contract. There will be other parts of the pie, like for switches, handsets etc," the person said.

R-Com is in talks with about seven to eight global players for the supply of handsets, the person said.

"Three are global brand names, while the rest are contract manufacturers," the person said, adding that the deals will "take a bit of time as talks are in the initial stages."

R-Com will also be starting its direct-to-home broadcast operations across India in the next two months, another person close to the matter said.

Direct-to-home, or DTH, refers to satellite television broadcasts intended directly for the home viewer, without cable operators.

"The company is initially investing about INR2 billion to INR3.5 billion on the roll out of services for things like wiring, some equipment, installation etc. This will be about 30%-40% less than what our competitors incurred in initial costs," the person said.

R-Com will run its DTH business through its wholly-owned unit, Reliance Big TV Ltd., the person added.

The company is finalizing its installation partners - those who will go door to door to install the equipment needed for the DTH services, such as the dish antennae, set top boxes, etc., the person said.

"R-Com already has the distribution network in place through its retail network for its telecommunications and broadband services," the person said.