BSNL panel to tap mega hook-up with Ericsson

State-owned Bharat Sanchar Nigam Ltd (BSNL) has set up a three-member committee to re-evaluate the tender for 45 million GSM connections awarded to Ericsson, to which Communications Minister A Raja has raised objections.

The committee, whose members were not a part of the original committee for tender evaluation (CET), is expected to submit its report in a week or so, sources in India's largest government-owned telecom company said.

Meanwhile, BSNL's approximately 3,20,000 employees have threatened to strike work in protest against the delay in awarding the order "" the largest contract in the sector to date "" for the company's long-delayed mobile services expansion.

Employee union representatives met Raja here today and said the minister told them that he had returned the order file to BSNL two days ago.

Previous such strikes by BSNL employees have severely impacted the country's communication networks, including private mobile networks that depend on the state-owned giant for interconnectivity with landline users.

The three-member committee has been asked to reply to Raja's queries on why BSNL disqualified US telecom major Motorola from the bids. The committee will also have to answer Raja's query on the selection of Ericsson's bid. The minister had said the Swedish company's bid was too high.

BSNL sources said the CET had recommended placing the advance purchase order to Ericsson at a final cost of Rs 3,558 per line (just under $87), which includes capabilities to deliver second- and third-generation (3G) services.

This figure, the sources claimed, is much lower than the original cost of Rs 4,990 (just under $110) per connection that had been quoted. At approximately Rs 16,000 crore, a deal of this magnitude requires ministerial approval.

One of the options before BSNL could be to go in for a quick tender without the 3G component. With Ericsson reported to have expressed its inability to cut prices further, a quick tender would mean that Motorola may be able to bid again, an event that may lead to further low prices. However, this would mean an additional delay of 12 to 18 months.

The GSM order came under a cloud after BSNL rejected the bids of Motorola and ZTE on grounds that they did not meet certain technical criteria. Both companies had offered much lower prices.

Motorola approached the Delhi High Court seeking a stay on the order, but later withdrew the case. After Dayanidhi Maran was forced to quit as communications minister by his party in May, Raja, his replacement, decided to hold back approval to the deal.