Alcatel-Lucent and ZTE have emerged the victors in one of the most tortuous wireless equipment awards ever held, with India’s state-run telco BSNL. The operator has been trying for more than two years to expand its overstretched GSM network but a succession of tenders has run up against corruption scandals, regulatory blocks and other hurdles. Now it has finally named its two suppliers, albeit for a somewhat reduced number of 2G lines.
RK Agarwal, director for consumer mobile services at BSNL, told Dow Jones that the purchase orders had finally been given out. Last month the contract appeared to have been in trouble yet again, when all the bidders except ZTE backed away, saying they could not match the Chinese firm’s offer. However, Indian rules state that large contracts must rely on more than one supplier, but also that all parties must match the lowest price tendered.
BSNL has apparently got round this, saying that ZTE proposed the lowest cost for the network equipment overall, but ALU was the cheapest for gear to handle prepaid subscribers (the majority in India). The vendors will share a deal for 14.37m 2G lines (well down on the 93m connections included in the original, much-stalled tender of 2010). BSNL had previously estimated that the contract would be worth about INR60bn ($1.09bn). ZTE was reported to have offered $840m for the entire roll-out, well below ALU’s $1.8bn, Huawei’s $1.3bn, Ericsson’s $2.3bn or NSN’s $2.5bn.
ZTE said its portion of the deal would supply over 10m new lines in the northern and southern regions of India. ALU did not comment. In mid-June, it was one of four vendors (along with Huawei, Nokia Siemens and Ericsson) which pulled out of the tender because they could not match ZTE’s bid, according to the Economic Times.
BSNL urgently needs to boost its 2G capacity, as well as accelerate the roll-out of 3G and broadband wireless services, to reverse the decline in its competitiveness against private cellcos like Bharti Airtel and Vodafone.