MTNL awards Rs 750 cr GSM order to ITI

Mahanagar Telephone Nigam Limited (MTNL) has awarded the Rs 750-crore order for two-million GSM lines for expanding its Mumbai operations to Indian Telecom Industries (ITI).

ITI makes GSM equipment in technical collaboration with French major Alcatel at its Mankapur and Rae Bareili plants.

While MTNL had issued an open tender for its 2 million GSM lines for its Delhi operations on Monday, the company has directly awarded its Mumbai project to ITI-Alcatel, without going through an open tender.

This is because, as per government policy, the service provider was slated to reserve 30 per cent of its equipment requirements for ITI.

According to MTNL executives, the company had explored two options to satisfy this criteria. "The first option was to leave the reservation quota out of the tender and call bids for only 70 per cent of its requirements for both Delhi and Mumbai. But we decided on the second option, which involved awarding the contract for 2 million lines in one of the metros to ITI, and issuing an open tender for the other city," MTNL sources told Business Standard.

Sources also added that the Rs 750-crore, 2-million GSM lines order would be in two phases. In phase I, ITI-Alcatel will have to provide 0.75 million lines for MTNL's existing 2G services and 0.25 million lines for 3G services, while under phase II, it will have to deliver 0.5 million each of 2G and 3G lines.

The order would also stipulate that 20 per cent of the project be completed in 6 months, 50 per cent in 8 months and 100 per cent in 12 months, MTNL sources added.

MTNL had issued tenders for 4 million GSM lines in June 2005, (two million each for Delhi and Mumbai), but had withdrawn it barely twenty four hours after it had been posted it on its website.

It did not give any reason for the same. Industry sources said the PSU was forced to withdraw the June tender as it did not contain the clause for 30 per cent reservation for ITI.