The Hindu Business Line : Ericsson accepts BSNL order for GSM equipment

New Delhi, Aug. 2 Swedish telecom equipment vendor Ericsson on Thursday accepted the contract offered by Bharat Sanchar Nigam Ltd for rolling out nearly 14 million cellular lines across the country.

The company submitted bank guarantee accepting the purchase order for supplying equipment and establishing a GSM network. BSNL will now offer an advance purchase order (APO) to Nokia-Siemens, the second lowest bidder for the remaining quantity of the GSM tender.

The total contract is for 23 million lines, which includes both 2G and 3G equipment.

While Ericsson had emerged as the lowest bidder by quoting $107 per line, the revised contact is being given out at around $90 per line.

Other contracts

Another contract for 9 million lines is being awarded to Alcatel-ITI joint venture under the PSU quota system. This will enable BSNL to roll out nearly 31.75 million cellular lines compared to the 60 million envisaged earlier.

The contract was halved after the Communication and IT Minister, Mr A. Raja, raised questions on the way BSNL carried out the tendering process.

The project is now delayed by more than 8 months after Motorola contested BSNL’s decision to disqualify it from the bidding process.

BSNL is also floating another tender for about 50 million lines in the next 8 months.

Market watchers pointed out that while Motorola had clearly withdrawn its case against BSNL in view of such a future contract, Ericsson’s move to accept the offer at reduced rates may also be viewed in the same light.

Capacity ramp-up

Ericsson’s decision finally paves the way for BSNL to ramp up its capacity which has been under severe pressure over the past few months. BSNL’s mobile subscriber growth rate has seen a dip over the past 3 months due to capacity crunch.

While this new contract with Ericsson may take several months before it is implemented on the ground, BSNL has placed an order for 4.5 million lines to manage the demand in the interim.