BSNL pays $80 a line to Ericsson for GSM

State-run telecom firm BSNL has placed the order for mobile equipment of 14 million GSM lines with Swedish vendor Ericsson at a cost of 80 dollar per line, much lower than the original cost of 107 dollar.

Ericsson officials said they have received the advanced purchase order (APO) for 2G equipment and would start studying it shortly. Ericsson has two weeks to pledge bank guarantee with the public sector firm, a mark of accepting the APO.

With the final deal size reduced by half to 23 million GSM lines, the contract now stands at two billion dollar or about Rs 8,000 crore. Of this, Ericsson being the lowest bidder will get 60 per cent of the order or about Rs 4,800 crore, while Nokia-Siemens, the second-lowest, would get 40 per cent or Rs 3,200 crore.

As for the 18.1 million line allotted to Alcatel-ITI, BSNL officials said the size of this contract would be taken up at a later stage but Alcatel-ITI would have to quote the same price as Ericsson.

The government yesterday allowed BSNL to place the contract for GSM lines but curtailed it to 23 million lines from the original size of 45.5 million lines. In the first phase, the company would roll out 17 million lines, comprising 14 million 2G and the remaining for the 3G network.

BSNL issued the APO to Ericsson shortly after it received direction from telecom minister A Raja, who had sought changes in the original contract valued at about Rs 18,500 crore as approved by his predecessor Dayanidhi Maran.

The company would place the APO for both 2G and 3G services, but the order for 3G equipment would be placed only after the policy on third generation services and spectrum availability is in place.