3 Firms Bag 50% Of First Dot Switch Tender In 3 Years

Alcatel Modi Network Systems and state-owned telecom manufacturers Indian Telephone Industries (ITI) and Hindustan Teleprinters Ltd (HTL) have won major chunks of a Rs 750 crore department of telecommunications (DoT) tender to supply 1.3 million lines of digital exchanges.

The cost per line of the equipment has been finalised at Rs 5,650 after protracted negotiations with switch (or exchange) vendors. A customs duty of about 42 per cent will take the real price up to Rs 7,910 per line for DoT. Purchase orders are to be placed on individual companies within the next fortnight.

This is the first major order for switches in the last three years. It will significantly add to the long-distance switching capacity of DoTs network, apart from local switching lines. The department had slowed the expansion of its long-distance network last year.

 

The order has been split between eight bidders. The companies are Alcatel, ITI, HTL, Siemens, Ericsson, Fujitsu, NEC and AT&T. Alcatel is expected to receive 20 per cent of the total order amounting to 260,000 lines while ITI and HTL will together receive an order for 390,000 lines in accordance with government policy to place 30 per cent of all tenders on them. The other five vendors will get 10 per cent each, sources said.

Surprisingly, the placement of the orders is on the basis of bid price. The vendor-rating system announced by DoT last year has not been used to evaluate the bids of the vendors. DoT sources said the vendor rating criteria was announced after the bids for the digital switches were opened and, therefore, was not used.

The finalisation of the tender ends uncertainty since March 1996 when the tender was first opened. The tender for the present order was floated in September 1995.

The prices quoted by the vendors were in a narrow band of Rs 7,300 to Rs 8,200 per line which prompted DoT officials to allege cartelisation among the vendors.

The prices were a 70 to 95 per cent mark-up over the previous switching tender for 1.7 million lines in 1994 when the settled price was some Rs 4,200. Vendors claimed the increase over 1994 prices was mainly on account of depreciation of the rupee, change in some technical specifications and a DoT requirement for leak-free batteries.