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BSNL Delays New GSM Tender

Indian service provider Bharat Sanchar Nigam Ltd. (BSNL) has held open the bidding on its massive GSM contracts to accommodate questions from vendors, once again delaying its much-needed network expansion.

The deadline for vendors to submit their bids has been extended from July 16 to August 30 so BSNL can address the more than 21,000 requests for clarification on the conditions of the tenders, a company official told the Hindu Business Line.

The tenders, issued in early May, call for the supply of 93 million subscriber lines -– 75 million GSM and 18 million UMTS –- and could be worth at least $6 billion. (See BSNL Floats New Mega GSM Tender.)

News of another delay in the carrier's network expansion is hardly surprising -- its previous attempt to award large-scale contracts was held up repeatedly and eventually resulted in a reduced contract being awarded to Ericsson AB (Nasdaq: ERIC). (See BSNL Lines Up GSM Options.)

That left BSNL with a shortfall in the extra equipment needed for an already congested network and the carrier continues to lose market share.

At the end of June, BSNL had 37.3 million GSM subscribers, behind Bharti Airtel Ltd. (Mumbai: BHARTIARTL) with its 69.3 million, Reliance Communications Ltd. 's 50.79 million CDMA and GSM subscribers, and Vodafone India ’s 49.1 million.

Like last time, BSNL has laid out a long list of conditions vendors have to meet in order to be eligible to receive the contracts. Among them, vendors are required to have deployed at least 20 million GSM lines at carriers other than BSNL, and 5 million lines for UMTS networks in two countries that have been operating commercially for a minimum of six months.

Vendors will also be expected to provide network support in the form of spares, upgrades, and services for the next seven years. Eligible vendors will have to have reported a turnover of more than 80 billion Indian Rupees (US$1.9 billion) in each of the previous two financial years.

This time BSNL has removed a clause that vendors should also have a reported a net profit, which was part of the reason for the carrier disqualifying Motorola Inc. (NYSE: MOT) from the previous contracts and the vendor taking it to court. (See Moto Stalls BSNL's Wireless Tender.)

— Nicole Willing, Reporter, Light Reading

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