Huawei approaches finishing line for BSNL's megadeal, despite hurdles

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Huawei approaches finishing line for BSNL's megadeal, despite hurdles

By CAROLINE GABRIEL

Published: 10 July, 2009

READ MORE: Huawei

As vendors still hover on the starting line, waiting for India finally to auction its 3G spectrum, GSM expansion proceeds apace in the country, as the operators race to roll out enough capacity to meet exploding demand for cellphone services, and improve the quality of those they do offer.

The flagship deal at the moment is also the most controversial - state-owned BSNL's 93m-line GSM deal, one of the largest ever tenders. Despite several roadblocks along the way, it seems that Ericsson and Huawei are likely to share most of the spoils.

This is a follow-on to a deal already awarded to Ericsson, and the second stage has been delayed by a series of disputes, starting when Nokia Siemens withdrew from the race last year because it was being asked to cut its prices to a level that the firm described as lossmaking.

A vendor that is more aggressive about undercutting on price in order to gain footholds in valuable markets, Huawei, has stepped up to the plate and claimed, with Ericsson, to have won a major portion of the re-awarded contract, but this hit its own problems, since Indian authorities claim to have security concerns over the Chinese company.

Now BSNL has confirmed it is studying bids from Ericsson and Huawei and junior telecom minister Gurudas Kamat told the Indian parliament this week that BSNL had opened the financial bids from Ericsson for the supply of GSM kit for the north and east regions; and the same from Huawei for the southern region. "Financial bids are opened only for the bidders whose bids are found techno-commercially eligible," Kamat said, but added that no contracts had been awarded yet.

Last fall BSNL received bids from Ericsson, Huawei, NSN, Alcatel-Lucent, ZTE and Nortel for the tender, estimated to be worth about INR30,000 crore ($6.3bn) and quickly became mired in accusations that it had unfairly favored some vendors over others (as alleged by, among others, NSN), and that Huawei came with security issues (hotly denied by the Chinese firm) Dow Jones reports that the federal home ministry and the intelligence bureau have raised concerns over the presence of foreign companies "especially from certain countries in the critical and sensitive border areas, that may have national security implications", but the fact that Huawei has been allowed to proceed to the final shortlist suggests some reassurances must have been offered.