The Hindu Business Line : BSNL’s GSM contract hits another roadblock

New Delhi, Nov. 14 Bharat Sanchar Nigam Ltd’s controversial GSM cellular project has hit yet another bump with Nokia Siemens expressing concerns with the revised tender conditions negotiated between Ericsson and BSNL. While 60 per cent of the contract for 22.5 million GSM cellular lines has already been awarded to the Swedish major Ericsson on account of being the lowest bidder, the other part was supposed to be given to Nokia Siemens as it had emerged the second lowest bidder.

According to BSNL sources, Nokia has expressed difficulty in accepting some terms of the contracts on the grounds that the specifications of the equipment were changed after the bids were put in by the company without consultation with them.

“They (Nokia) have expressed some doubts and we have clarified them. We hope that the contract would be concluded shortly. If, however, the company decides not to accept the contract, then we will have to look at other options in such a way that it does not impact our rollout plans,” said a senior BSNL officer.

Industry sources close to the negotiations, however, point out that the primary concern for Nokia Siemens is that some of the changes in the tender condition could be more beneficial to Ericsson. They said that Ericsson, which had quoted $107, may have re-negotiated the terms to suit some of its core strengths, including supply from third-party vendors in order to keep the price under $100 as per the instructions of the Communication Ministry.

On the other hand, Nokia had quoted $170 per line, which is almost double the final negotiated price and, therefore, changes in the specifications will impact the viability of the contract for the company. Source said that Nokia Siemens may opt out of the project though a final decision is yet to be conveyed to BSNL.

However, BSNL officials pointed out that, “It was made very clear to all the bidders that the second lowest bidder will have to match the contract signed with the lowest bidder in all aspects. So if we have signed a contract with Ericsson then as per the tender condition Nokia Siemens has to accept the same terms,” said a senior BSNL official.

BSNL’s GSM project, initially envisaged for 45 million subscribers, had been in limbo for more than a year. The contract initially got stuck in litigation when Motorola challenged the PSU’s decision to disqualify it from the bidding process. It hit another major block when the Communication Ministry intervened and asked the company to revise the contract both in terms of size as well as price.