BSNL playing safe on $5-bn GSM deal

Players keen on world's biggest equipment tender.

Bharat Sanchar Nigam Ltd (BSNL) has decided to incorporate stiff bank guarantees and other safeguard clauses in its upcoming $5-billion tender for 60 million GSM lines following the failure of companies like Nortel, IBM, Huwaei Technologies and HFCL to deliver telecom equipment on time in the past.

Slated to be the world's largest equipment deal, global equipment majors including Alcatel, Nokia, Motorola, Ericsson, Lucent, ZTE and Huwaei Technologies are in the running for the tender, which is expected to come out by month-end.

"We are looking at a steep hike in the bank guarantees to a couple of hundred crores. Rather than a completion deadline, we are examining the possibility of a definite road map with quarterly targets and progress reports. Companies could also be required to adhere to inspections by the PSU," BSNL sources said.

The move comes in the wake of the company's ambitious $500-million digital wireless network rollout in eastern and western zones being hit due to delay in deployment of equipment by Nortel Network.

Also, the second phase of the National Internet Backbone (NIB-II) of BSNL, which was to put India on a par with advanced nations, is yet to be operational as vendors such as Telecommunications Consultants India Ltd (TCIL) and IBM have failed to deliver the required equipment.

Besides, in November 2005, the PSU had encashed the bank guarantee and cancelled Huwaei's Rs 140-crore contract for supplying equipment for 1.05 million CDMA lines, in partnership with Himachal Futuristic Communications (HFCL) and SCL.

Huwaei's failure has been a setback to BSNL's plans to clear its waiting lists in rural areas by 2006-end. BSNL executives said the company was yet to decide the action against Huwaei Technologies.

All eyes on

Equipment contract for $60 million GSM lines to come out by month-end

Global majors including Alcatel, Nokia, Motorola, Ericsson, Lucent, ZTE and Huwaei Technologies are in the fray

Big names like Nortel, IBM, Huwaei Technologies and HFCL had failed to deliver telecom equipment on time in the past