BSNL's GSM megadeal in turmoil again, Huawei contract cancelled
Published: 7 December, 2009
READ MORE: India | BSNL | Huawei Technologies | GSM
One of the most tortured contract awards in wireless history has been BSNL's giant GSM expansion project in India, which totals 96m lines spread over four zones. First Nokia Siemens pulled out of part of an earlier deal because the state-owned carrier apparently insisted on dropping the price; some elements have been retendered more than once after some bidders were disqualified on technical grounds; and there has been huge controversy over Huawei's participation. Now BSNL is reported to have cancelled the Chinese vendor's portion of the deal, for 20m GSM lines in the southern region of India.
The operator told India's Economic Times that this was because Huawei had imposed unacceptable conditions. "There was no scope for accepting conditions as the order was placed after detailed negotiations and as a government owned firm, BSNL does not accept conditions," said a spokersperson.
There has been persistent speculation that the Indian government was putting pressure on BSNL not to award significant deals to Huawei because of suspected links with Chinese military and intelligence operations (which Huawei denies), and this may have kept the vendor out of bidding in politically sensitive regions.
Whatever the factors, this new development puts the whole deal in jeopardy again, which in turn threatens to see BSNL falling further behind as the Indian cellcos race to expand their 2G coverage, with demand rapidly outstripping supply. Although the operator has selected Ericsson for the north and east regions, this deal has not been finalized either. Meanwhile, the west zone is undecided - this, too, had originally been earmarked for Huawei, but it seems that choice could have been vetoed by the authorities because of the sensitivity of some western areas.
In addition, BSNL has been criticized for lack of transparency in its process and for choosing only one vendor per region, while Nokia Siemens is challenging the rejection of its own bid in court. Sources speculate that BSNL could start the whole process again and retender, though some said Alcatel-Lucent was the runner-up for the southern region and could be offered the Huawei deal, as long as it could match the price. Of the total 96m lines, at least 21m must also be provisioned for 3G services. The overall contracts should total about $6.5bn.
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