20 % Lower Dot Offer For Digital Lines

The counter-offer is a 20 per cent mark up over the prices quoted by the eight switching vendors, including six multinational telecom equipment manufacturers, in a 1994 tender for supply of 1.7 million DELs. Vendors had then supplied switching equipment at about Rs 4,200 per line.

The DoT counter-offer is expected to be made in the next few weeks. The departments decision follows the recommendation of a price negotiation committee which was set up in the department to bargain with the switch vendors.

The committee held preliminary discussions with representatives of the switching majors. DoT officials say there was a clear case of cartellisation among the switching companies giving the narrow price band in which they had quoted.

 

The prices quoted by the vendors were almost 75 per cent over the 1994 prices. Vendors claim the increase in the March tender over 1994 prices was mainly on account of rupee depreciation, change in some technical specifications and a DoT requirement for leak-free batteries.

The lowest quote in the March tender was from Alcatel, which had quoted a weighted average per line price of Rs 7298.50. Siemens and Ericsson finished second and third respectively. Others further down the list were Fujitsu, NEC, Indian Telephone Industries, HTL and AT&T. AT&Ts alternate quote was also ranked eighth.

By virtue of its sheer size, estimated at Rs 650 crore, the tender had generated a lot of interest among the companies. According to the tender conditions, DoT is to award orders in inverse proportion to the quotes.

The order will now be placed depending on which vendors accept the DoT prices. Being the lowest bidder, Alcatel will be expected to get a substantial chunk of the order, but it now remains to be seen whether the company will accept DoT prices.

All switching vendors have been complaining about the low prices at which they are forced to supply equipment to DoT. They claim their switching production lines are making heavy losses and this may force them to reassess their India strategy. Siemens, for instance, has been contemplating downsizing its Calcutta operations, where it manufactures EWSD switches. DoT officials claim that the same switching vendors have been concluding cellular switch deals at as low as $55 per line.