BSNL decides to scrap Rs 35,000-cr GSM tender

State-run telecom major Bharat Sanchar Nigam Ltd (BSNL) decided to scrap its controversial tender for 93 million GSM lines, worth Rs 35,000 crore.

In a board meeting today, the company decided to accept, in part, the recommendations of the Sam Pitroda committee, on the tender and to move to an outsourcing model for equipment.

BSNL, the second largest mobile services provider just three years earlier, has fallen to fifth position. It steadily lost ground to private sector rivals, with its share of the market, once well above 20 per cent, plummeting to just 12 per cent.

“The company will be able to meet immediate capacity requirements. We have 20 million lines with us,” said a senior executive. It can also place a few orders with existing vendors. The executive said BSNL’s board had conveyed the decision to scrap the tender to the government, which would now take the final call.

The Pitroda committee had suggested BSNL scrap the 93-million line tender and change the method of its growth from outright purchase of equipment to leasing these. Private telecom players already follow such a model for expansion. By doing so, BSNL would reduce its capital expenditure, besides reducing its problem of having shortage of young trained engineers in the latest technologies, had said the Pitroda report.

BSNL Chairman and Managing Director Kuldeep Goel could not be reached for comments.

The issue of the tender was referred to the committee headed by Pitroda, after many controversies — ranging from home ministry objections on Chinese equipment firms to legal battles by disqualified vendors. The committee also had HDFC Chairman Deepak Parekh and telecom secretary P J Thomas as members.

The hurdles in the project started after BSNL disqualified three of the five bidders on technical grounds. Ericsson and Huawei were shortlisted, while Nokia Siemens, Alcatel Lucent and ZTE were disqualified. Nokia Siemens challenged its disqualification in the Court.

Further, security agencies said BSNL could not buy telecom equipment from any Chinese vendor, including Huawei. BSNL, subsequently, started negotiations with Ericsson for lower prices. However, the Department of Telecommunications said BSNL might not get the best price, since there was no competitive bidding.

Then, the Central Vigilance Commission was asked to examine, which suggested cancelling the tender and calling for bids again. Meanwhile, the tender was put on hold.