BSNL gives in to Raja, halves GSM tender

The deal will be limited to 2G lines only.

The board of state-owned Bharat Sanchar Nigam Ltd (BSNL) is learnt to have halved its 45.5 million line GSM order and decided to renegotiate the price with Ericsson and Nokia "" the two equipment manufacturers who had earlier qualified for the order based on their price bids.

The marathon meeting of the BSNL board on Monday in Delhi, which lasted over three hours, is also believed to have come to a consensus that the order will be limited to second-generation (2G) lines and a separate tender for third-generation (3G) lines, which offer high-speed Internet access, will be floated later.

The decision to overturn the earlier order, which was a combination of 2G and 3G lines, falls in line with Communications Minister A Raja's letter to the board that the current tender be restricted to only 2G lines, considering that the 3G policy has not been finalised.

"Keeping in mind the minister's suggestions and BSNL's interests, we have taken some decisions that will be conveyed to Raja," BSNL Chairman and Managing Director AK Sinha said after the meeting, refusing to discuss details.

However, sources said at least one senior BSNL official was of the view that the order should be divided with 17.5 million 2G lines and 5.5 3G lines.

But that was overruled as the two representatives from the department of telecommunications contended that the new order should be limited to 2G lines.

Sources said the board, which decided against any financial rebidding, hoped to complete the award in the next few days.

A three-member committee, set up by the board to find ways to resolve the controversial awarding of the contract, submitted its report to the board today.

The controversial BSNL equipment order came under a cloud after Raja questioned the deal, saying the price of $108 per line quoted by Ericsson was too high and that he wanted an investigation into why Motorola and Zte were disqualified from the tender (they were disqualified on technical grounds).

Motorola had gone to court opposing its rejection but had withdrawn the case later.

BSNL could have gone for a rebid of the equipment deal but that would have attracted the ire of the company's powerful staff association, which had threatened an indefinite strike if the government delayed the award of the contract.

Last week, the staff association struck work for a day, protesting the delay. BSNL employees have been complaining that the company will lose market share to private competitors if the contract was delayed any further.