The Hindu Business Line : Nokia Siemens declines BSNL deal on pricing concerns

New Delhi, Nov. 23 In a blow to Bharat Sanchar Nigam Ltd’s cellular roll-out plans, Nokia Siemens Networks has refused to accept a $910-million contract from the State-owned company on the grounds that it could not supply the equipment for mobile services at the price agreed to by the lowest bidder –– Ericsson.

The Swedish equipment major Ericsson had agreed to supply 60 per cent of the 22.5- million cellular line project at about $90 per line after making changes in the tender conditions. Nokia, the second lowest bidder, was to get the remaining part of the contract; but the Finland-based gear manufacturer has expressed concern over the revised tender conditions.

The tender size was reduced by half after the Communication Ministry raised doubts over the process followed by BSNL. The Ministry also insisted that the price per line will have to be less than $100. While Nokia Siemens had quoted $170, Ericsson had put in a bid of $107 per line. This meant that Nokia would have had to reduce the price by almost half of what it had quoted if it wanted to get the contract.

‘No setback’

In a bid to salvage the project, BSNL officials said other options including awarding the entire contract to Ericsson was being looked at. The officials, however, contended that Nokia’s refusal would not have much impact on roll-out plans as the company is planning to float a new tender for 60 million lines.

They also said that BSNL has the option to offer Nokia’s contract to its existing equipment vendors including Nortel, which had not even bid for this contract.

According to BSNL sources, Nokia had expressed concern that the specifications of the equipment were changed after the bids were put in by the company without consulting them.

‘Beneficial to Ericsson?’

Industry sources close to the negotiation point out that the primary concern for Nokia Siemens was 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.

This is the third bump that has hit the controversial GSM project, initially envisaged for 45 million subscribers. 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 in terms of size as well as price.

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BSNL’s GSM contract hits another roadblock
BSNL tender: Ericsson sets terms for lowering price

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