Ericsson, Nokia Set to Win BSNL’s USD 7 Bln GSM Tender; Motorola Out of the Race

Bharat Sanchar Nigam Ltd (BSNL), India’s telecom operator, has announced Ericsson and Nokia as winning bidders for its USD 4.8 GSM tender, amid protests in the courts from disqualified American vendor Motorola. Ericsson is likely to bag 60 pct of the deal while Nokia is expected to end up with the rest the deal, since it came in as the second lowest bidder.

Although five players had put in their bids for the GSM tender, two of them—Motorola and China’s ZTE—were eliminated on technical grounds, according to a BSNL official. However, the China factor may have also played a role in eliminating Motorola, ZTE and the other bidder Huawei, sources said. Swedish telecom major Ericsson is learnt to have emerged as the lowest bidder for adding 45.5 million Global System for Mobile Communication (GSM) lines.

Prime Minister’s Office Seek ClarificationsThe Prime Minister’s Office has sought clarifications from the Department of Telecom regarding alleged lack of transparency in state-owned BSNL’s tender for adding 45.5 million GSM lines.

The Prime Minister’s Office has sought clarifications from the Department of Telecom regarding alleged lack of transparency in state-owned BSNL’s tender for adding 45.5 million GSM lines.BSNL had floated a tender for adding 60 million GSM lines, of which a contract for about 15 million lines was awarded to ITI-Alcatel joint venture leaving three bidders, Ericsson, Nokia and Siemens.

“The specifications of the tender have been repeatedly changed to protect the interest of some foreign firms,” a letter from PMO to DoT says.

According to the PMO, “several informal instructions have been issued to the BSNL from senior levels in the ministry and there are apprehensions that the tender may be finalised in a not very transparent manner.” French telecom major Alcatel has tied up with ITI, which is getting contract from BSNL under reserved quota for PSU and of this Alcatel would indirectly get 40-45 per cent share.

In other words, Alcatel would be getting a major contract without even participating in the tender process. According to PMO, Alcatel’s share has been valued at about Rs 20 billion.

Look Out for 3GBSNL alone is setting up 30 million lines, while the other operators will add another 45-50 million lines over the next two-three years.

BSNL alone is setting up 30 million lines, while the other operators will add another 45-50 million lines over the next two-three years.With the total subscriber base expected to double from the existing 100 million, the operators’ investment can be assumed at an average USD 80 per subscriber for enabling high-speed web surfing and streaming video services.

Users will need to buy handsets separately, which will be around Rs 5,000-7,000 for the average entry-level device.
The USD 80 price is derived from the USD 65 MTNL recently paid for a partly 3G network.

The estimates for investment take into account the fact that 3G services are likely to be made available first in metropolitan and other big cities. Even there, the target users will be the top layer of the subscriber base.

The average cost would be much higher at USD 135 per user, and 3G users would be confined to the ‘creamy layer’, said Cellular Operators’ Association of India Director-General TV Ramachandran. This is a figure substantiated by NK Goyal, president, Indian Manufacturers’ Foundation.

The Telecom Regulatory Authority of India had recommended a minimum spectrum fee of Rs 1,050 crore for a pan-India 3G spread.
Operators need to erect an overlaying network, one parallel to their existing networks to start 3G services. Investment for GSM operators is expected to be much lower than for CDMA operators who, an equipment vendor said, would need to upgrade substantial portions of their network.

For GSM operators, the upgrade will primarily be incremental, and involve installation of new base stations. They will mostly be able to use their existing towers. For CDMA operators, it will virtually be a new network.

Source- http://www.sda-india.com