Chines equipment maker ZTE and Huawei have emerged as the two lowest bidders for supplying GSM equipment to Bharat Sanchar Nigam Ltd.
ZTE put in the lowest bid at $50 (about Rs 2,500) for a line. BSNL will buy 14.3 million lines which means that the two Chinese vendors will get about $710 million for the contract.
The bids for network equipment were opened on Friday.
Other vendors including Nokia Siemens and Ericsson did not make the cut.
This is the first time that neither of the two European equipment makers figure among he lowest bidders in a BSNL tender.
Intelligent Network equipment
The PSU also opened the bids for supplying Intelligent Network equipment.
Alcatel Lucent has emerged as the lowest bidder in this category followed by ZTE.
While Nokia Siemens was the highest bidder for the GSM network part, Ericsson quoted the highest for the Intelligent Network part.
Industry analysts said that the bids indicated that the European vendors are under pressure to keep away from projects that does not give them decent margins.
“The Chinese vendors have the backing of Chinese banks and can, therefore, take a hit on margins but the European suppliers are increasingly being choosy about the projects they want to get assocaited with,” said a market watcher.
BSNL has been trying to buy equipment for the past five years but it has not been able to due to some controversy or the other.
The PSU earlier wanted to buy 90 million lines but the project was scuttled after questions were raised about the tendering process.
Revised tender
Even the current tender for 14.3 million lines was revised twice over the past six months and still there are concerns raised about the way the bids were conducted.
BSNL had earlier suggested to conduct a 3G type reverse bidding to select the lowest bidder but then reverted back to the old system of buying through a single bid process.
The shift is also contrary to an internal note circulated by BSNL in February.
Justifying the importance of the auction method, the note had said, “The DoT has already done this (auction method) for 3G spectrum and in other USO Fund tenders. This is quick and most transparent, and financially beneficial to BSNL. This process will encourage more healthy competition.”
The committee, set up under Mr Sam Pitroda to look into reviving BSNL's fortunes, had also suggested the auction method for buying equipment.
BSNL workers' union, meanwhile, has shot off a letter to the Communications and IT Minister, Mr Kapil Sibal, on the issue.