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The state-owned operator has issued a tender for a major 4G deployment, but its private-sector rivals are preparing for a possible 5G launch later this year.
April 15, 2020
As the rest of the world moves toward 5G, India's state-owned BSNL has finally kicked off 4G rollout plans with its tender worth about 110 billion Indian rupees ($1.44 billion) for about 50,000 sites in the north, east, west and south zones of the country.
The tender also includes an INR86.9 billion ($1.14 billion) contract for 7,000 sites in the metropolitan cities of Delhi and Mumbai, managed by sister company MTNL.
The last date for the vendors to apply is May 8, and the bids will be opened the next day. There is a possibility of delay, since India is under lockdown until May 3 to prevent the spread of COVID-19.
The bidding document says that the company with the lowest price (L1) will get the choice to select three out of the four zones for which the tender has been floated. The second-lowest bidder (L2) will get the option to opt for one of the remaining zones at the lowest price of L1. In case L2 refuses, the same will be offered to L3 and so on. However, if all the other vendors refuse, the L1 bidder will be asked to deploy in the fourth zone as well.
ITI Limited, a public-sector undertaking, will set up the 4G network in the fifth zone. However, it has the right to refuse and, in that case, the L1 bidder will be obliged to deploy 4G in this zone at the L1 rate.
The government is paying for the 4G spectrum as per the revival package, which led to a funding injection of $2.1 billion, announced in October last year. Further, the Finance Ministry will provide a sovereign guarantee of INR150 billion ($1.96 billion) to carry out this expansion. (See India's Ailing BSNL & MTNL Get Revival Package.)
As per the media reports, all the vendors, including Samsung, will be bidding for the BSNL tender. Samsung is the sole radio supplier to private-sector operator Reliance Jio and is not known to work with any other telco. Its participation in the BSNL tender therefore comes as a surprise.
The delay in offering 4G services to subscribers is hurting BSNL and MTNL. Together, the two companies incurred losses of INR95 billion ($1.24 billion) in the fiscal year ending in September 2019. BSNL recorded a loss of INR75.1 billion ($985 million), while MTNL incurred losses of INR20 billion ($262.7 million).
Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.
"Stiff competition in mobile segment, high employee cost and absence of 4G services (except in few places for BSNL) in the data-centric telecom market are the major reasons for the losses in BSNL and MTNL," says Ravi Shankar Prasad, India's telecom minister, when responding to a question in parliament recently.
BSNL had a market share of 9.73% in December 2018, and this rose to 10.26% in December 2019, according to data released by Telecom Regulatory Authority of India (TRAI). Its gains, however, came only because price rises at the private-sector telcos, including Bharti Airtel and Vodafone Idea, prompted some customers to move to BSNL. (See RJio will gain most from India's tariff hike.)
It might be too late for BSNL to launch 4G in India. The private-sector players launched 4G way back in 2016 and have extensive coverage today. Airtel has gone a step further and shut down its 3G network. Moreover, an auction of 5G airwaves might be held later this year. Building a position in 4G will be tough, but it might just prevent subscribers from moving to rival networks.
— Gagandeep Kaur, contributing editor, special to Light Reading
Read more about:Asia
With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.
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