BSNL's GSM march held up by vendor roadblock

State-owned BSNL''s aggressive plans for cellular expansion have hit a major stumbling block with one of the bidders awarded part of a $2 billion contract refusing to accept it.
Nokia Siemens Networks (NSM), being the second-lowest bidder for the BSNL tender for 45.5 million GSM lines, subsequently revised to 22.5 million, had been awarded 40% of the contract with the lion''s share going to the lowest bidder Ericsson.

Ericsson had initially quoted about $107 per line, while the NSN quote was about $167. The Ministry of Communications had intervened to reduce the size of the contract and had insisted on a sub-$100 quote for each line. Ericsson had subsequently reduced its bid to $91, and was awarded 60% of the contract with the rest being offered to the runner-up NSN. However, the latter has declined considering it to be economically unviable. Another grouse of the NSN camp is that they consider some of the terms of the new contract to specifically favour Ericsson and its key strengths. According to BSNL sources, Nokia had expressed concern that the specifications of the equipment were changed after the bids were submitted, without consulting them.

Addressing a press conference on Friday, BSNL Chairman and Managing Director, Kuldip Goyal, said that price difference was the main reason for NSN not accepting the order, but added that negotiations were still going on. He also three possible options that BSNL had to deal with the current imbroglio - either award the entire contract to Ericsson, or bring in existing BSNL vendors like Nortel (which didn''t bid in the tender), or to float a new tender altogether.

He also indicated that in case of a fresh tender, they might remove the clause of having manufacturing base in India that was compulsory for participation. Deletion of this clause would allow more companies, especially from China like ZTE and Huawei, to participate in the tendering process.

This is the third hurdle in the current tender process. After the initial government intervention and contract revision, the process was held up for several months by orders of the Delhi High Court when one of the bidders, Motorola, lodged a case after its disqualification on technical grounds. Motorola later withdrew the complaint.