BSNL to call fresh bids for new lines

ZTE bows out after Huawei misses deadline.

Chinese telecom equipment vendor ZTE has turned down an offer from Bharat Sanchar Nigam Ltd to supply 1.05 million CDMA lines. BSNL will now call for fresh bids for its CDMA project.

The contract was earlier awarded to Huawei Technologies, which had bid in partnership with Himachal Futuristic Communications Ltd (HFCL) and Semiconductor Complex Ltd (SCL). The consortium was, however, unable to meet the deadline set by BSNL for equipment supply.

Last week, BSNL approached ZTE, which had quoted the second lowest (L2) price when bids were invited in December 2006. BSNL executives said ZTE had informed the PSU that it could not match the low price quoted by Huawei.

"We had asked them (ZTE) to match the price quoted by Huawei, but they have turned down the offer on the grounds that it will be a loss-making deal to supply 1.05 million CDMA lines for Rs 140 crore," a BSNL executive told Business Standard.

BSNL has now decided to issue a fresh tender. Company executives said a tender for 3.5 million lines was expected to be issued later this week. The PSU had approached ZTE as a precautionary measure to avoid any complications like not having asked the L2 bidder to supply equipment.

BSNL had issued a showcause notice to Huawei in October for failing to supply the CDMA equipment and had also cashed HFCL's bank guarantee of Rs 2 crore. On its part, HFCL has a back-to-back agreement with Huawei to recover the bank guarantee.

The PSU's board will meet shortly to decide the future course of action against Huawei.

BSNL had received bids from HFCL and state-owned SCL, based on Huawei's memorandum of understanding with both the firms and letters of authorisation to them for bidding on Huawei's behalf. BSNL issued advance purchase orders to HFCL and SCL in August 2005.