BSNL toes Raja’s line, cuts GSM tender to 23 mn

The BSNL board on Monday is learnt to have agreed to halve the size of its 45.5 million GSM lines contract to about 23 million lines, in line with the suggestion of communication minister A Raja.

But, sources said that there were differences between the board members on the composition of the 23 million lines. ET has learnt that while some members wanted a mix of 17.5 million 2G lines and 5.5 million 3G lines, another section was of the view that the entire 23 million lines must consist of only 2G lines.

Sources said that the BSNL board would let the department of telecom (DoT) take a final call on the issue. They also added that the contract would now be priced at less than $90 per line. The DoT is likely to opt for limiting the contract to only 2G lines as its two representatives on the BSNL board favoured this option during the meeting, sources added.

Sources also added that despite Mr Raja questioning the logic of disqualifying US network major Motorola from the tender, the board has decided to stick to its stand. This leaves only Ericsson and Nokia in the fray.

The company officially did not comment on the outcome of the board meeting. “We have tried to take a decision which will go in the interests of BSNL. On Tuesday, we will send our suggestions to the government,” BSNL chairman AK Sinha told newspersons after the meeting. “We dwelt on all the options,” he added, but refused to divulge any further details.

The BSNL unions had last week gone on a day long strike over the delay in awarding the contract. They had called off the strike on the condition that the management would resolve the issue within 15 days.

Sources said that the BSNL board, in its reply to Mr Raja would maintain its earlier stance that Motorola had failed to meet the stringent technical criteria stipulated by the tender, especially with regard to 3G component, which constituted 50% of the tender.

A reduction in tender size will imply that Ericsson’s share will come down to 13.8 million lines from 27.9 million lines earlier while Nokia which emerged as L2 will get 9.2 million lines against 18.4 million envisaged earlier. As per the terms of the tender, Nokia will have to match Ericsson’s price and the contract will be split between the Ericsson and Nokia at 60:40 ratio.

At a price of $107 per line, the total value of the contract is $4.87 billion, where Ericsson’s part of the tender is at $2.92 billion, while the value of the Nokia contract is pegged at $1.95 billion