BSNL may have sought to halve order

BSNL may have sought to halve order
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First Published: Tue, Jul 17 2007. 12 38 AM IST
Updated: Tue, Jul 17 2007. 12 38 AM IST
New Delhi: Government-owned telecom company Bharat Sanchar Nigam Ltd (BSNL) has recommended cutting by half, the size of its controversial mobile telephony tender that attracted a court case, forced an intervention by the communications and IT minister, and saw protests from employees.
The company’s board met on Monday and, according to a person close to the development, this is what it decided to recommend to the government. The person did not wish to be identified given the sensitivity of the issue.
BSNL’s official spokesperson on the issue, chairman and managing director A.K. Sinha, refused to divulge the details of the recommendations. “The decision has been taken keeping in mind the interests of the company,” he said, referring to the difficulties faced by BSNL in catering to the booming GSM market in India. India added 52 million GSM subscribers in the year ended 31 March. GSM is a technology platform for mobile telephony and the dominant one in India.
If the government accepts the recommendation, BSNL will have enough capacity to meet growth in mobile subscriber numbers for the next 18 months.
However, the tender will still be executed by LM Ericsson and Nokia Siemens Network at $107 (Rs4,323) a line. The tender, to install 45.5 million GSM lines (each line corresponds to a subscriber), was awarded to LM Ericsson last year. The firm had bid $107 a line.
In keeping with the terms of the tender, Nokia Siemens, which had bid around $160 a line and was the second lowest bidder, was asked to execute 40% of the order at the same price as Ericsson.
Motorola Inc. was disqualified from bidding because BSNL said the company lacked the experience required to put up 3G (third generation) lines that are used for data-intensive applications.
Motorola took BSNL to court last year. It withdrew its case on 31 May and said it was doing so because BSNL was a “valued customer”.
However, last month A. Raja, the minister for communications and information technology, said the prices quoted by Ericsson were too high when compared with the $69 a line quoted by Motorola for a GSM tender put out by Mahanagar Telephone Nigam Ltd.
Raja had asked Ericsson to reduce its price below $100, which the company refused. He then asked BSNL to explain why it had disqualified Motorola and not issued a new tender leaving out 3G lines.
It isn’t known whether the reduced order includes the 3G component of the tender.
BSNL has seen its share of new connections drop from around 20-22% last year to 5-10% this year as many of its circles became overburdened with subscribers. Employees claimed the delay in executing the tender was causing BSNL to become irrelevant.
“Our demand was for the immediate issue of purchase orders for the entire 45.5 million lines, but what we need urgently is enough to supply new connections for another 18 months at least,” said V.A.N. Namboodiri, the general secretary of the BSNL employees union.
The controversy over the tender has also seen BSNL slip from being the second biggest GSM operator in the country, to the third biggest in May.
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First Published: Tue, Jul 17 2007. 12 38 AM IST