Motorola, ZTE cry foul as BSNL opens tender

Ericsson lowest bidder at $107 a line; Motorola moves court, ZTE to follow.

Bharat Sanchar Nigam Ltd's (BSNL) 62 million GSM line tender has run into rough weather, with the Delhi High Court giving the state-owned telecommunications company two weeks to respond to a complaint by Motorola that it was unfairly disqualified.

As Ericsson emerged the lowest bidder with a $107-a-line bid today, the court gave directions to BSNL that award of the tender would be subject to its orders.

On Saturday, both Motorola and Chinese telecom giant ZTE were disqualified by BSNL's technical evaluation committee. Since Motorola also produces some of its equipment in China, analysts said security issues could be a reason.

"We will surely challenge the BSNL decision to disqualify us," a ZTE source told Business Standard. "Motorola is surprised and disappointed with the decision to not invite it for the price bid opening for BSNL's GSM and 3G equipment tender," a Motorola spokesperson said.

However, AK Sinha, chairman and managing director of BSNL, said: "We will continue with the technical evaluation according to the terms of the tender. We will respect the court's judgment." Ericsson executives declined to comment.

Finland-based Nokia emerged the second-lowest bidder with a bid of $176 a line. The third-lowest was Siemens, which bid over $350 a line. The lowest bidder will get 60 per cent of the order and the second-lowest, the rest.

One of the largest equipment deals anywhere in the world, the BSNL tender has drawn all the leading telecom equipment manufacturers.

Of the 62 million lines, 18 million are reserved for the ITI-Alcatel joint venture to encourage the state-owned telecom manufacturing company. ITI-Alcatel will be awarded these lines at today's lowest bid, $107 a line.

Industry experts close to the deal said at least one of the disqualified equipment manufacturers might have quoted a price lower than Ericsson.

Motorola's main grouse is that Nokia and Siemens merged their network business into Nokia-Siemens Networks, a company that comes into being from January 1, 2007.

Thus, effectively, only two bidders "" Ericsson and Nokia-Siemens Networks "" are being considered. BSNL executives argue that they have bid separately and so are being treated as two companies.

Motorola has also been in regular discussions with BSNL and responded to all the technical queries raised.

A week ago, Motorola provided compliance undertakings on various requirements desired by BSNL. At no point was Motorola told that its bid was being dropped on technical grounds. On Saturday, Motorola learnt from market sources that it had not been invited to the opening of the price bids.

Sources also point out that Motorola tried to impress on BSNL the fact that it recently won a $120 million 3G network order from MTNL, another state-owned company.

Motorola, which earlier bagged a contract for GSM equipment in India, does business of over $300 million with BSNL. ZTE is carrying out BSNL's Rs 600 crore contract for laying CDMA lines.