The world?s largest telecom tender, floated by BSNL for an additional 93 million GSM lines at a cost of Rs 36,000 crore, could be scaled down. A government nominee on the company?s board has struck a note of dissent, stating that the company?s falling revenue and marketshare do not warrant such a large capacity addition and therefore should be halved. The government owns BSNL and the department of telecommunications is its administrative ministry.
At the company?s board meeting on December 21, JS Deepak, DoT joint secretary and a government nominee on BSNL?s board, presented the dissent note to BSNL CMD Kuldeep Goyal, which argued that the decision to procure equipment for 93 million lines was taken in April 2008 assuming that BSNL?s marketshare would stabilise at more than 15% in mobile services.
?However, it appears that BSNL?s marketshare in mobile services, which has today come down to less than 13% from 18% a few years back, may ultimately stabilise (at) between 6% and 8% with increased competition in a total market of about 1 billion mobile phones,? he stated.
Given the rapidly declining marketshare, fall in revenues from telecom services, decline in profits in the last four years and the huge likely losses in the current and future years, Deepak said, ?There is a need for the management committee of BSNL to revisit this assessment and inform the board whether procurement of additional capacity of 93 million lines is still required.?
DoT has suggested that BSNL go for a short re-tender for the project and that the vendor of the immediate preceding contract can address any contingency requirements. Deepak also objected to any price negotiation with Swedish equipment maker Ericsson, the lowest bidder (L1) for the north and eastern regions, stating that this would go against Central Vigilance Commission (CVC) norms.
BSNL?s 93-million line tender had earlier run into problems after it disqualified three vendors, Nokia Siemens, ZTE and Alcatel Lucent, due to technical reasons. This left only Ericsson and Chinese firm Huawei in the fray. Nokia Siemens protested its disqualification and took the matter to court, the Competition Commission of India and the CVC, but to no avail.
The tender also ran into further problems recently when BSNL cancelled the contract for the southern zone awarded to Huawei, when it refused to accept post-tender conditions imposed by the company.
There were no bids for the western zone. BSNL, which currently has around 55 million subscribers in the GSM mobile segment, ranks fourth in the pecking order in terms of user base. It lost its third position to Vodafone-Essar due to delays in finalising contracts to vendors for capacity addition.