Date:19/07/2007 URL: http://www.thehindubusinessline.com/2007/07/19/stories/2007071951950100.htm

Back BSNL gets Raja’s nod for 23 m lines

Thomas K. Thomas

New Delhi, July 18 The Communication and IT Minister, Mr A. Raja, on Wednesday gave his approval to BSNL to place an order for 23 million GSM cellular lines instead of the earlier announced 45.5 million lines.

While the size of the contract is only 50 per cent of what BSNL had earlier planned, it includes both third-generation (3G) and second-generation cellular lines.

The value of the contract has also been reduced from $107 per line to around $90. Mr Raja had wanted the price to be brought to under $100.

While 17.5 million lines will be rolled out in the initial phase, the 3G equipment will only be deployed once the Government announces its policy for 3G mobile services.

Ericsson will get 60 per cent of the contract and Nokia the rest.

The two companies together will get about $2 billion from BSNL for the equipment.

The move would allow BSNL to ramp up its network capacity to some extent, though the reduced size may impact long-term growth.

Ericsson has said that it would comment on the development after studying the revised conditions of the contract.

If Ericsson does not agree with the price it has the option to refuse the contract.

However, Mr V.A.N. Namboodiri, Convener of the BSNL employees union’s joint forum, said: “We are not satisfied that the size of the contract has been curtailed. We will hold a meeting on Thursday to decide future course of action.”

The union had threatened to go on indefinite strike if the entire contract was not awarded by July 26.

The BSNL contract had run into rough weather in October when Motorola legally challenged its decision to disqualify it from bidding for the project. Subsequently, it withdrew the case.

Mr Raja asked BSNL to hold back the contract on the grounds that the company had not followed due process.

He also wanted BSNL to explain why it was prepared to award the contract to Ericsson at $107 per line, when Motorola had offered equipment to MTNL for less than $70.