BSNL restrained from awarding GSM contract

Our Corporate Bureau
02 November 2006

In a setback to state-owned BSNL, the Delhi High Court has asked it to award its GSM contract only after the next hearing on 16 November 2006. State-owned BSNL had short-listed bid winners Ericsson and Nokia for award of the GSM contract. A bench comprising acting Chief Justice Vijender Jain and Justice Kailash Gambhir today passed the restraining order while hearing the petition filed by US telecom major Motorola, which was disqualified by BSNL on technical grounds from participating in the bidding.

Motorola has challenged BSNL's decision before the High Court.  This is not great news for ITI because the Delhi High Court has actually put on hold the award of contract at least till November 16. So there is no way BSNL can award the contract till that date. There is no clarity yet on whether it can do it after that.

ITI was supposed to match the lowest bid in that particular contract. The contract was of 63 million GSM lines, out of which 18 million lines were reserved for ITI and 45 million lines were for the other five bidders.

Last month, BSNL opened the financial bids for the mega expansion of its GSM network adding over 45 million lines over a period of three years at an estimated cost of about Rs 200 billion. Swedish company Ericsson had emerged the lowest bidder followed by Nokia of Finland.

Eriksson and Nokia won that particular contract. Ericsson was the lowest bidder and it quoted a price of $107 per line. ITI was supposed to match that bid.

Motorola was the bidder that lost and it has challenged the entire bidding process. Now the High Court, in what seems to be a partial victory for Motorola, at least to start off with, has said that BSNL cannot go ahead and award the contract till the matter has been heard. The next hearing is on November 16.