BSNL freezes GSM mega-tender due to probe

Dylan Bushell-Embling
04 Jan 2010
Daily News

Indian state-owned operator BSNL has put its 93 million line GSM tender on hold, after finding itself under scrutiny by government investigators.

BSNL's board has decided that no orders will be placed until all allegations of irregularities in the tender process have been investigated, India's Economic Timesreported.

And the operator last month reportedly dumped Huawei, one of just two equipment suppliers selected for the project, from the tender process after post-bidding negotiations stalled.

The Central Vigilance Committee (CVC) has launched a fresh probe into BSNL's conduct during the tender process, amid allegations that the company broke CVC rules.

The CVC has taken issue with the fact that BSNL renegotiated on price with Ericsson, the remaining winning bidder, after the bidding process had concluded. This is reportedly a violation of the Committee's guidelines.

BSNL has openly admitted to renegotiating with Ericsson, stating that the talks could result in a 20-25% reduction in price and generate savings of up to $1 billion.

India's Prime Minister's Office plans to intervene in the dispute, calling an emergency meeting on January 6 to discuss BSNL's poor economic performance. The delays issuing the tender will be on the top of the agenda, officials told ET.

BSNL has been operating at a loss for the past two years, and has fallen from the nation's second largest mobile operator to fifth place since 2005.

The tender – believed to be the world's largest equipment order - has been delayed for over a year, and has now suffered three major hurdles.

The first was an attempt by disqualified bidder NSN to have the tender blocked by the courts, over allegations the vendor was unfairly disqualified from the process.

The second occurred when security agencies objected to awarding contracts to Huawei, citing concerns over the vendor's possible ties with the Chinese government. As a result, Huawei was allowed to win the tender only in the south, where India does not share any land borders.

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