BSNL vendor contracts continue to cause chaos

13 Jul 2007

BSNL’s GSM network expansion plans have once again stalled, prompting employees to strike in protest at ongoing delays in awarding equipment contracts whilst its network has no spare capacity. After numerous false dawns, BSNL had finally been poised to place orders worth more than USD4 billion with Ericsson and Nokia Siemens Networks in May. But India’s incoming IT and Communications Minister Andimuthu Raja has taken issue with the tender, negotiated by predecessor Dayanidhi Maran, and is pushing the telco to renegotiate the prices quoted by the vendors.

A statement by the Ministry of Communications and IT says that Raja ‘found some discrepancies in [the] processing of GSM tenders and accordingly, advised BSNL to look into those issues in the larger interest of BSNL.’ Ericsson put in a bid to supply the equipment for USD107 per line, and, as the lowest bidder, it would get an order for 60% of the 45.5 million lines to be installed. Nokia was the second lowest bidder at USD160 per line, thus placing it to supply the remaining 40% at the same price as Ericsson. But Raja has questioned why BSNL would award the bulk of the contracts to Ericsson, when Motorola is supplying GSM equipment to BSNL’s sister carrier, MTNL, for just USD70 per line. Raja has also asked BSNL to clarify why it disqualified Motorola from bidding, a move that resulted in Motorola taking the operator to court.

Ericsson has reportedly refused to reduce its bid further, so BSNL is now under pressure to remove an order of 3G gear that was to be included in the contracts and focus on procuring cheaper GSM equipment. Raja argues that it is unnecessary for the carrier to install 3G lines when the government is yet to agree on a 3G policy and suggests that BSNL issue a separate 3G tender at a later date.