The Hindu Business Line : Nokia, Nortel set to bag BSNL contract

FINNISH technology major Nokia is all set to bag its first major contract in India by sharing a part of the world's largest tender floated by Bharat Sanchar Nigam Ltd (BSNL) for 12 million Global System for Mobile (GSM) based mobile lines with Nortel of Canada.

Nokia is likely to get the project to set up four million lines in North India, despite Nortel being the lowest bidder for all the three regions. While Nortel offered to take up the project at $74 per line, Nokia quoted slightly higher at $75 per line.

What has come to Nokia's aid is a clause in the tender document that no single company would be awarded the contract for all the three regions, squashing Nortel's bid to sweep the world's largest tender, valued at about Rs 4,000 crore.

As per the terms, in case any single company ends up being the lowest bidder in all the three regions, the contract in one of the sectors will be awarded to the second lowest bidder where the difference in the price quoted between the lowest bidder and the runner-up is the lowest. In the northern region, the difference between Nortel, the lowest bidder, and Nokia, the second lowest bidder, is just under a dollar per line.

The other two regions of South and East with seven million lines are likely to be awarded to the Canadian major Nortel on account of being the lowest bidder. The company has quoted $73.3 and $76 per line for the two regions, respectively. The decision to award the contract will be announced by BSNL after technical evaluation of the bid documents.

While this would put Nokia and Nortel on India's equipment provider map, it may come as a blow to dominant companies such as Motorola, Ericsson, Siemens and Huawei which had also bid for the contract. The contract for the western region has already been awarded to the French major Alcatel.

Telecom analysts said that despite the size of the contract of 12 million lines, BSNL was not gaining much in terms of cost per line. They said that other operators had previously negotiated a per line cost that was as low as $65. However, executives from equipment companies said that the cost per line for BSNL was at a higher level since the contract included civil works, generators and other back-up equipment, which was not part of the project undertaken for private operators.

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