BSNL Gets Temporary GSM Fix

Motorola Inc. (NYSE: MOT) has provided more details of a $90 million GSM contract extension with Bharat Sanchar Nigam Ltd. (BSNL) , part of a stopgap measure for the Indian mobile operator as it invites bids for a new round of supply deals. (See Motorola Supplies BSNL.)

BSNL indicated in March that it had placed follow-on orders with previous suppliers Nortel Networks Ltd. and Motorola to add GSM capacity after its large-scale network expansion contracts fell through. (See BSNL Goes for More GSM Gear.)

The orders are providing some temporary relief from network congestion in India's Southern region, which includes the Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Chennai circles. (See A Guide to India's Telecom Operators.)

Nortel was deploying gear for over 2 million new subscriber lines in March and expects to finish by the end of the year. (See Nortel Bags BSNL Deal.)

Motorola started delivering its 2.3 million lines in April. "The rollout is imminent because BSNL is strapped for capacity," says a spokesman for the vendor.

BSNL's subscriber growth has been seriously hobbled by a shortage of spare capacity for new users, an ongoing problem compounded by the drawn-out negotiations for a 45 million-line expansion project that ended up with it awarding a contract to Ericsson AB (Nasdaq: ERIC) for only 13.5 million lines. (See Upheaval in India's Mobile Market.)

For months now, BSNL has been signing up a few hundred thousand new subscribers, compared with the million-plus additions touted by rivals like Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Reliance Communications Ltd. (RCom) . In March, BSNL claimed 1.89 million adds, helping push the total number of new subscribers in India for that month over the 10 million mark. (See India Crosses 10M Mobile Adds in March.)

According to the latest figures from the Cellular Operators Association of India , BSNL fell behind again in April, signing up 473,187 new subscribers. The carrier’s GSM network has capacity for around 36 million subscribers, and it ended April with 36.68 million. The 2.3 million lines being delivered by Motorola will give it another boost, but they equate to just one month’s worth of new subscribers over at Bharti, which added 2.4 million in April to take its mobile customer base to 64.3 million.

That’s why BSNL has invited bids for a new round of contracts for a total of 93 million new subscriber lines that will address its immediate needs for capacity and allow room for future growth. (See BSNL Floats New Mega GSM Tender.) The tender calls for 20.5 million GSM and 4.5 million UMTS lines in the southern region.

Motorola found itself disqualified from the technical requirements in the previous project and took the carrier to court, but it's still keen to get a piece of the action this time around, which is likely to be worth billions of dollars. (See Moto Stalls BSNL's Wireless Tender and Court Delays Cost BSNL Millions.)

The vendor's spokesman says Moto will "participate in every bid and every contract," and expects to be competitive with the tight margins demanded by the state-owned carrier. "It eventually depends on how it pans out," he says, but "we will bid for everything."

It was the Indian government's pressure on BSNL to renegotiate pricing that led to Nokia Siemens withdrawing from a deal last year, which Ericsson then declined to take on. (See Upheaval in India's Mobile Market.)

— Nicole Willing, Reporter, Light Reading

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