Raja apprises PM on BSNL tender, 3G spectrum auction

Telecom Minister A Raja is understood to have broached the issue of BSNL's Rs 35,000- crore expansion programme with Prime Minister Manmohan Singh, amid controversy following propriety issues raised by two government nominees on the company's Board.

The minister met Singh last week and discussed various issues including inordinate delay in execution of BSNL's tender for expanding the network by 93 million GSM lines. BSNL has only a little over 55 million mobile users and is fast running out of capacity to add new subscribers, while some private players boast of over 100 million users.

Raja's meeting came in the wake of two government nominees -- joint secretary J S Deepak and a senior DoT official P K Mittal -- on BSNL's Board asking the PSU to reconsider the tender in view of its market share and revenues falling sharply vis-a-vis private operators.

However, sources in the know said that BSNL has already managed to bring down the price of equipments to be supplied by Ericsson (for North and Eastern region) by about 40 per cent and the minister was satisified with the outcome.

A note given by Department of Telecom (DoT) Joint Secretary J S Deepak, however, questioned the single bid brought out by BSNL and the lack of comparative analysis on the basis of total cost to the company. This, Deepak, claimed was against CVC guidelines.

According to industry experts, the concerns raised by some Board members could upset the network expansion programme, on which 15 months have already been spent doing evaluation and negotiations.

Besides, they wondered about the need for re-evaluation as the tender process has been cleared by two former chief election commissioners. Cancellation or any delay in the contract could hit BSNL hard at a time when government is thinking of disinvestment, a senior official said on condition of anonymity, adding that in such an eventuality only corporate rivals could be benefited.

Raja, who is in Chennai, could not be contacted despite several attempts. Sources said that the minister also discussed 3G spectrum auction plan with the Prime Minister.

BSNL's capacity to add more mobile subscribers is diminishing in most of the centres at a time when the private players are adding 15-17 million new users every month. Further delay in execution of project would affect BSNL both in terms of market share as well as revenues.

The minister, according to sources, had given free hand to the BSNL management to negotiate with the bidders to bring the cost down and execute the project fast.