BSNL agrees to Ericsson's conditional supply of equipment

In a development that could result in increased costs, state-owned Bharat Sanchar Nigam (BSNL) has placed an "urgent" order for 5.25 million additional GSM lines with Ericsson, but the Swedish company has attached some strict conditions.

"Ericsson is prepared to supply additional capacity only if certain infrastructure items such as tower, generators, shelters, ACs and stabilisers among others, are not procured," sources close to the development told PTI.

In view of this, BSNL may have to go for hiring these items from infrastructure providers or directly procure these items, leading to increase in cost of GSM lines.

BSNL's decision could come under scrutiny for agreeing to most of the conditions put up by Ericsson for accepting an order for add-on capacity for which tender was floated in 2007 and conditions were agreed upon by both the parties.

Sources said BSNL should have stuck to its original terms and conditions of the tender for placing orders for add-on capacity for which the PSU is allowed to procure the equipment (only for add-on capacity) without following tender route.

They said that this decision was discussed in the recent Board meeting of the BSNL and the PSU has agreed to go ahead with placing the order with Ericsson.

BSNL's decision to place order with Ericsson comes at a time when the PSU is facing another controversy of disqualifying Nokia-Siemens Network on technical grounds in its latest tender for adding 93 million GSM lines at an investment of over Rs 32,000 crore.

Asked what kind of financial losses BSNL may have to suffer on account of diluting the original terms and conditions, sources declined to comment but said it could be very high.

In a communication to the respective Chief General Managers of various regions, the BSNL management said, "BSNL management has approved the procurement of additional 5.25 million lines capacity from Ericsson under phase V.2 project. The case is being processed for issuing Advanced Purchase Order (APO) on Ericsson."

The communication has been sent to the CGMs of Haryana, Himachal Pradesh, Punjab, Rajasthan, Uttaranchal, UP, Bihar, Orissa, West Bengal and Kolkata telecom circles.