BSNL puts 93-m-line GSM tender on hold

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In a move that could delay its mobile roll out plans further Bharat Sanchar Nigam has directed all its zonal offices across the country not to place any purchase order under the 93-million-line tender until further orders.

In a letter to all zonal Chief General Managers, the State-owned company said, "The tenders for procurement of 93 million GSM lines were floated by four zones of BSNL on May 1, 2008 under Phase VI project. I am directed to advise you not to place advanced purchase order/e orders on bidders till further orders. This is issued with the approval of the competent authority," a BSNL internal note dated November 12 said.

The trigger for such a letter was not known especially since BSNL has already given an advanced purchase order for 8 million GSM lines to Chinese vendor Huawei in the South zone and negotiations with Ericsson was on for the North and East zones. The BSNL Chairman, Kuldeep Goyal, could not be reached for comments.

The DoT had earlier shot off a letter to BSNL asking the PSU to re-tender the project since a single vendor may not give the best price.

BSNL's 93-million tender had hit controversy after it disqualified three vendors - Nokia Siemens, ZTE and Alcatel Lucent due to technical reasons. This left only Ericsson and Huawei in the fray. Nokia Siemens protested its disqualification and took the matter to court, Competition Commission of India and the Central Vigilance Commission. BSNL had also set up an independent panel to investigate the tendering process, which gave it a clean chit. Nokia Siemens had alleged irregularities in the way BSNL had disqualified its bid.

While the fate of the tender is not immediately known, the order to not purchase any gear could have a negative impact on the PSU's market share. If BSNL decides to scrap this tender and seek fresh bids, then it could to lead more legal complications as Ericsson may then take the matter to courts.

The 93 million line project was supposed to give BSNL more capacity to keep pace with the private players in adding capacity. As it is the company's profits are under tremendous pressure with market analyst predicting that the PSU will go into the red at the end of the current fiscal.

PMO meeting

The Prime Minister's Office has, meanwhile, called for a meeting with BSNL executives and officials from the DoT to review BSNL's performance. The declining market share and receding bottom line comes at a time when the Government is contemplating to list the PSU.

Taken from Business Line