New Delhi: Bharat Sanchar Nigam Ltd (BSNL) has emerged the lowest bidder in more than three-fourths of the 81 specified rural areas where the department of telecom (DoT) wanted to set up 7,800 cellular towers, sources close to the bidding said.
Bidding for the towers, for which the government’s universal services obligation fund (Usof) had set aside Rs323 crore annually for five years, swiftly ended when BSNL asked for just around 20% of the subsidy on offer. Reliance Infrastructure and GTL Infrastructure are reported to have won the majority of the remaining 18 clusters.
The state-owned operator also ensured that not a single rupee will be paid as subsidy from Usof for rolling out cellular services on such towers, by asking for zero-subsidy in all the 81 areas. Usof had set aside Rs156 crore a year for provisioning of the services.
According to the terms of the tender, three cellular operators were to be entitled to cash subsidies for running services from each tower from the fund, but only at the lowest rate asked by any of them. By asking for no subsidy, BSNL has set that rate at zero. Reliance Communications, Hutchison Essar and Idea Cellular, too, bid for a zero-subsidy for running the services.
Bharti Airtel, which had been eliminated in 30 out of the 45 areas it had bid for in the first round by ‘zero-bidding’ by the others, was the only operator to break the ranks, offering to pay Usof for a place on its towers. It had put in negative bids, implying a reverse subsidy to the government, in 12 out of the 15 areas it was allowed to bid in. It later affirmed in a press release that it was confident of being selected in all the 15 clusters.
“In a way, Airtel had no option but to go below zero. If they had chosen only to match others by putting in zero, they would not have made it past the second round due to their higher bid in the first round,” an executive with one of the other bidding operators said.
Reliance, too, has put in zero-subsidy bids in all the clusters, but has gone a step further by using its GSM and CDMA companies to make the bids. While Reliance Communications, the CDMA operator, bid in 74 out of the 81 areas, Reliance Telecom, the GSM arm, made bids in 40.
“Everyone seemed to have decided that, since the subsidy is going to be zero even if one of them quotes zero, we might ensure ourselves a place by quoting zero as well,” another executive at a second bidding company said, asking not to identified.
As a result of Monday’s bids, most of the nearly Rs2,400 crore Usof had earmarked for this round of rural expansion will be saved.