BSNL, Ercisson break impass on GSM tender

Written by Rishi Raj | Vrishti Beniwal | New Delhi, Sep 6 | Updated: Sep 7 2007, 06:46am hrs
The GSM capacity expansion of Bharat Sanchar Nigam Ltd (BSNL) is now finally set to take off with the state-owned company succeeding in resolving issues relating to the tender with Sweden-based equipment vendor Ericsson. Sources said Ericsson has agreed to accept the advance purchase order (APO) to lay 14 million GSM lines at a reduced price of about $80-90 per line. Initially, Ericsson had quoted a price of $107 per line and emerged the highest bidder. An announcement to this effect is expected on Friday from BSNLs newly-appointed chairman and managing director Kuldeep Goyal.

When contacted, a senior Ericsson official declined to comment but said the submission of the performance bank guarantee by the company last month was a significant development.

Though the tender was approved more than a month back by communications and IT minister A Raja after the BSNL board halved the size, Ericsson had so far not accepted the APO due to differences over pricing. The company wanted that prices of certain components like the annual maintenance contract to be kept outside the per line cost.

By resolving issues with Ericsson, BSNL would now be able to place the balance order to Nokia Siemens, which had emerged L2 in the bid. The design of the BSNL tender was such that the L1 bidder was to be given 60% of the order while L2 the balance 40%. However, to place the APO on the second highest bidder, it was mandatory for the highest bidder to accept the order as the same terms and conditions is applicable to both. Our total order size is now $2 billion. A preliminary order with Nokia Siemens will be placed in next few days. Ericsson will also begin supplying the equipment within 5-6 months, a BSNL official told FE.

Nokia Siemens India region head Ashish Chowdhary had recently said that BSNL was yet to place the APO on the company and it would only be able to decide whether it can accept the APO once the terms and conditions are made known to them. The BSNL tender had got delayed first when last year one of the vendors, Motorola, went to court when its bid was rejected in the technical stage. Subsequently, the company withdrew the case but Raja felt that the $107 a line was too high and wanted it to be cut. Finally, the BSNL board reduced the tender size to half at 22.5 million lines in July this year.