BSNL Goes for More GSM Gear

Still short on network capacity following the messy demise of its 45.5 million line GSM tender, Indian state-run operator Bharat Sanchar Nigam Ltd. (BSNL) has placed follow-on orders with previous suppliers Nortel Networks Ltd. and Motorola Inc. (NYSE: MOT) for 5 million lines.

BSNL has ordered 8 billion Indian Rupees (US$197.67 million) worth of GSM equipment, divided equally between the two vendors, for the Southern region of India -- covering the Tamil Nadu, Andhra Pradesh, Karnataka, and Kerala circles.

Kuldeep Goyal, chairman and managing director of BSNL, has also told reporters the carrier is preparing a tender for an additional 25 million GSM lines in the region.

BSNL had originally planned to award $4.5 billion in contracts to Ericsson AB (Nasdaq: ERIC) and Nokia Networks last year, but ended up placing a reduced order with Ericsson, while Nokia declined to sign what would have been a low-margin deal. (See Upheaval in India's Mobile Market and BSNL Awards $1.3B GSM Contract.)

Its network close to full capacity, BSNL has been struggling to keep up with the pace of India's mobile growth. According to numbers released this week by the Cellular Operators Association of India , the operator added 824,284 new GSM-based subscribers during February, down from the 1.07 million it added in January. BSNL ended February with a total of 34.57 million GSM subscribers, putting it behind Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. (RCom) , and Vodafone India in market share. (See A Guide to India's Telecom Operators.)

Goyal says the carrier is also planning to invest INR4 billion ($98.84 million) in expanding its CDMA-based wireless local loop (WLL) network across 500 towns. It will focus on providing roaming and high-speed data access over the network, which will also fill in gaps in its GSM coverage. For that, BSNL is turning to another previous supplier, ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), which sold it equipment for more than 2 million fixed wireless lines in 2005.

BSNL is splashing its cash all over its wireless and fixed networks, and has set aside a $4.7 billion budget for the financial year beginning in April. (See BSNL's $4.7B Blowout.)

— Nicole Willing, Reporter, Light Reading

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