Bidders Walk Away from BSNL Network Expansion Contract

Published on: 19th Jun 2012

­India's BSNL may be facing more problems with its oft-delayed attempts to issue a network expansion tender after four of the shortlisted bidders were reported to have walked away from the contract.

Citing numerous sources, the Wall Street Journal reported that Huawei, Alcatel-Lucent, Ericsson and Nokia Siemens Networks have pulled out of the tender, claiming that they cannot match the offer from Chinese vendor, ZTE.

The contracts are for around 14.4 million lines.

ZTE's bid is reported to have come in at around US$840 million, compared to US$1.3 billion for Huawei, US$1.8 billion by Alcatel-Lucent, US$2.3 billion by Ericsson and US$2.5 billion by Nokia Siemens Networks.

BSNL has repeatedly tried to issue tenders to expand its network, but has been hit by politically inspired delays, security concerns about allowing Chinese vendors to install kit in border areas, and often complex demands on the suppliers.

The latest attempt was looking the most likely to actually succeed. Until now. The main hurdle is Indian security rules that require multiple suppliers for large contracts, but also that the other bidders must match the lowest price awarded.

If the other networks walk away from the tender, then it is effectively dead again.

This is the third attempt to secure a network expansion by the state-owned company which has seen its market share under pressure from the more nimble private networks. Even a head-start on building a 3G network failed to deliver any benefits to the company.

On the web: Wall Street Journal