Motorola drops lawsuit against BSNL: Ericsson and Nokia celebrate

18 Apr 2007

The Indian press is reporting that Motorola has withdrawn the lawsuit it had filed against BSNL in the Delhi High Court, which challenged its disqualification in a 45.5 million lines tender issued by BSNL. The US company said it had decided to withdraw the lawsuit, which was filed on 9th October 2006, in view of ‘the tremendous telecom growth taking place in the country and BSNL’s petition of capacity constraints to have its share in this expansion.’ Motorola’s petition had resulted in BSNL being unable to place any orders pursuant to its tender, until such time as the case had been heard in court. Motorola said the withdrawal of the lawsuit in no way reflected any change in its original position that its bid was in compliance with the tender conditions. Motorola added that it considered BSNL a valued customer and looks forward to continued partnerships with the company.

The end of litigation is good news for Ericsson and Nokia, which are the principal beneficiaries of the USD5 billion contract.Indeed the deal could be worth much more if, as has been widely reported, BSNL scales up the tender by between 50% and 100% after the initial orders have been placed. ‘Our procurement policy allows us to scale the size of the tender. We may look at either 50% or even a 100% upward revision at a later date,’ a top BSNL executive told journalists.

As per the terms of the tender, Ericsson, which emerged as the lowest bidder, will get a order for 60% of the 45.5 million lines while the second lowest bidder — Nokia— will get the remainder. Ericsson’s winning bid is believed to have been priced at USD107 per GSM line, which values its part of the tender at USD2.92 billion, while Nokia’s bid was priced at USD177 per line, pegging the value of its contract at USD1.95 billion. BSNL sources said that 60:40 ratio between Ericsson and Nokia would be maintained for any upward revision of the tender.