HC asks BSNL to put on hold Rs 20K cr network contract

State owned telecom company Bharat Sanchar Nigam Ltd (BSNL) will have to wait at least until November 16 before it can show any of the international bidders competing for its Rs 20,000 crore expansion plan green lights.

The Delhi High Court on Thursday asked BSNL to not award the contract to expand its mobile network by another 60 million lines at least until that date. The tender is under the court’s scanner because US telecom giant Motorola Corp filed a petition to look into its disqualification from the tender.

On October 9, BSNL had announced Sweden’s Ericsson and Finland’s Nokia winning bidders for its tender, which is the world’s largest telecom contract. There were immediate protests from the American communications leader, which has alleged that BSNL has not been transparent after its disqualification.

Ericsson had bid the lowest per-line cost to BSNL and was poised to bag 60 per cent of the lines being awarded, while runner-up Nokia was to get the remaining 40 per cent. Of the 60 million lines, 15 million are already allocated to ITI, another PSU, which has a tie-up with the French telecom giant Alcatel.

Since the court has put awarding the tender on hold, Ericsson, Nokia, ITI as well as Alcatel will have to wait, at least until the next hearing. Acting Chief Justice Vijender Jain and Justice Kailash Gambhir of the Division Bench of the High Court say in the order: “BSNL cannot award contract till the next date of hearing though it may process it.”

The BSNL tender had set stringent conditions, which were controversial from day one, especially because they expected an annual turnover of at least $1.8 billion for every suitable contender. In addition, every contender needed to have 20 million lines installed, of which one network with at least 2 million lines must be running.

The vendors also need to have supplied GSM networks in at least 10 countries and have two 3G networks up by December 2005, each with capacity to support 5 million users. In BSNL’s reply to a notice issued by the HC earlier after Motorola’s petition was filed, the PSU said it found Motorola ineligible on both the technology and commercial criteria required to bid for this contract. Motorola could only show 3.2 million lines instead of the 20 million lines demanded, BSNL has told the High Court. BSNL’s affidavit also says that Motorola’s approximate losses of Rs 37 crore in 2004-05 also went towards the decision to disqualify it.

The winning bidder will be expected to roll out the BSNL GSM lines in three phases with around 18 million lines to be installed in the first phase, followed by about 14 million lines in the next two stages.

In the past, BSNL has had trouble with Nortel over delays in network expansion, and with Huawei, for backing out of a separate tender it had bid for and bagged last year.

Motorola’s lawyer, A.S. Chandioke on Thursday asked the Court for time to go through BSNL’s reply, and this matter is now posted for a hearing on November 16.