BSNL Threatens to Ban Huawei

It's been one problem after another for Huawei Technologies Co. Ltd.'s Indian operations.

The Chinese equipment vendor has been repeatedly set back by the Indian government's security concerns, and now it could be banned altogether from bidding on contracts issued by state-owned operator Bharat Sanchar Nigam Ltd. (BSNL).

Huawei confirms it has received a notice from BSNL for failing to deliver on a contract for 1.05 million lines of CDMA2000 equipment that it won through Indian partners Himachal Futuristic Communications Ltd. (HFCL) and Semiconductor Complex Ltd. Huawei is awaiting a decision from the government on its application to bid on tenders and in the meantime has to use local partners to participate on its behalf.

According to Indian media reports, BSNL issued advanced purchase orders for the equipment to HFCL and SCL in August for delivery in November but was told they were not receiving the support they needed from Huawei. On October 7, BSNL issued a "show cause" notice giving the vendor 10 days to explain why it shouldn't be excluded from future tenders, which it did, and now the two companies are hashing out the dispute.

"In view of ensuring a successful project for BSNL, we are still in discussions to find a mutually beneficial solution," writes Huawei India spokesperson Fu Jun in an email to Light Reading.

The carrier is considering banning Huawei from participating in any tender -- wireless or fixed -- it issues for a year, or permanently banning the vendor from bidding on CDMA projects in the future. BSNL executives could not be reached for comment as this article was published.

The brouhaha could be particularly harmful to the Chinese vendor, which is already viewed with suspicion in the Indian telecom industry; it caused a stir when it undercut its rivals on price and won the RS1.4 billion ($31.16 million) bid and now faces criticism on its failure to follow through.

Keen to stress Huawei is a "reliable" company that has "a long, successful relationship with BSNL," officials have sought to deflect the blame onto its partners. "Since the beginning of this project, we have worked closely with our local partners to ensure an effective and timely implementation of the project," writes Jun. "Huawei Technologies has established many initiatives, processes, and systems to ensure a successful implementation in meeting the needs of BSNL."

The stakes are especially high, as BSNL has a major GSM tender coming up in December that just got bigger -- the carrier has bumped up the proposed order from 40 million to 60-70 million lines in a deal that could be worth over $4 billion. That would make it the largest ever telecom tender in a market that is seeing explosive growth and that everyone wants in.

Sweden's (Nasdaq: ERICY) said Monday it plans to invest hundreds of million of dollars in India, including boosting its manufacturing facilities to up its position in the bidding stakes. The Indian government recently ruled foreign vendors must have a local manufacturing presence to bid on contracts. (See India Blocks Foreign Telecom Gear.) Other Chinese vendors likely to bid include ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) and Comba Telecom, which opened an office in India yesterday and plans to participate through its OEMs (one of those OEMs is ZTE).

Huawei also has expansion plans in India to the tune of $100 million that it's waiting to get approved. "Huawei is committed to the Indian market and participates and invests to further the development of India's telecom industry," writes Jun.

— Nicole Willing, Reporter, Light Reading

startup_shutup 12/5/2012 | 2:56:00 AM
re: BSNL Threatens to Ban Huawei Employees wade their way through a water-logged compound of a Wipro Corporate office in Bangalore.

trzwuip 12/5/2012 | 2:55:59 AM
re: BSNL Threatens to Ban Huawei This post has no relevance to the issue discussed here. Please upgrade your sense of posting.
startup_shutup 12/5/2012 | 2:55:57 AM
re: BSNL Threatens to Ban Huawei >> This post has no relevance to the issue discussed here. Please upgrade your sense of posting.

Are you sure ... ?
got_light 12/5/2012 | 2:55:56 AM
re: BSNL Threatens to Ban Huawei Tottaly agree with what fieberous said. HFCL is a rogue company and will remain so. I remember one of the products these guys were offering the Ministry of Home Affairs, claiming that its an indigenous encryption solution, where as the specs (Iguess including the typos) were the same of a German company.

BSNL threatens Huawei!!

Sounds like Bush threatening Saddam over state-mismanagement and lack of intelligence!

Come on guys, don't put RBOCs, AT&T, BT and BSNL in the same league. BSNL is probably the most corrupt prganization in the world.

Huawei... Probably the cheapest in terms of quality.

I have a BSNL DSL line to home and my CPE reboots every few hours. So there goes my VPN connectivity..

Just like everything else in India, the Communist coalition at the government level will force the central government to consider and choose Huawei as the prefered vendor. These guys will kiss and make-up.

Anyone betting if this doesn't happen?

Got Light?
fiberous 12/5/2012 | 2:55:56 AM
re: BSNL Threatens to Ban Huawei Let me steer you folks to the relevancy:

About two or more years ago HFCL was caught in
a stock exchange scandal. HFCL is a trading
company. However, after this they decided to
invest in R&D. So, the recruited Mr. Chalam
[ex-Jasmine] and a few others who were part
of the old UTstarcom origins in NJ.

These guys found a fat paymaster that they could hoodwink. They projected they could be better than Huawei and presented their half baked ideas.
The HFCL political clout got them ahead
but reality closed in soon.
Huawei and UTstarcom their OEM partners cancelled
their OEM deals with them and went direct.
The Indian carriers have been left in a lurch
after they made payments directly to HFCL.
They have to put pressure on Huawei.
Since, Chalam and his scoundrels have flown
the coup.

trzwuip 12/5/2012 | 2:55:52 AM
re: BSNL Threatens to Ban Huawei The state owned telcos like BSNL win deals in India not based technical, performance or commercial merits of the contract, but how it benefits the pockets of their employees.

There are numerous shady companies like HFCL. OEM's have no choice, but to partner with them or have them front-end the bid due to several conditions put by the Government, not suitable for a direct bid, like liability, payment terms etc.

How will the BSNL corrupt officials make money if they take the shadies out? They won't! That's why you are seeing all this mess.
brahmos 12/5/2012 | 2:55:01 AM
re: BSNL Threatens to Ban Huawei see the article below. btw I wouldnt read too much into the waterlogged wipro office - saw it yesterday evening. it looks like a mid-range commercial building that wipro hurriedly rented due to need for space. the ground floor level is only a few inches off the road, so no wonder it got flooded.


BSNL junks Huawei's contract
Joji Thomas Philip / New Delhi November 05, 2005
Rs 140 crore contract for 1.05 mn CDMA lines cancelled.

Chinese equipment vendor Huawei Technologies has run into rough weather in India. State-owned Bharat Sanchar Nigam Ltd has cancelled the Chinese company's Rs 140-crore contract for supplying equipment for 1.05 million CDMA lines in partnership with Himachal Futuristic Communications Ltd (HFCL) and Semiconductor Complex Ltd (SCL). BSNL had issued a showcause notice to Huawei in October for failing to supply equipment.

BSNL, the country's largest telecom operator, has also encashed HFCL's bank guarantee of Rs 2 crore for the consortium's failure to honour the contract. BSNL executives today said a fresh tender for 3.5 million CDMA lines would be issued next week and HFCL and Huawei would not be permitted to participate in the tendering process.

The BSNL board will meet next week to decide the future course of action against Huawei. Wenhe Gong, director, Huawei Telecommunications (India) Co Pvt Ltd, could not be reached for comments despite repeated attempts.

When contacted, HFCL Chairman Mahendra Nahata said the encashment of the bank guarantee was in step with tender conditions. GǣWe, however, have a back-to-back agreement with Huawei to reimburse us for the bank guarantee,Gǥ he said.

Nahata also said HFCL had written to BSNL urging the company be allowed to participate in future contracts.

BSNL had received bids from HFCL and state-owned SCL, based on Huawei's memorandum of understanding with the two and letters authorising them to bid on behalf of the Chinese firm. BSNL then issued advance purchase orders to HFCL and SCL in August 2005.

The Indian companies had said they were unable to accept the order because they were not getting support from their technology provider Huawei.

BSNL said the consortium's failure to supply equipment for CDMA lines would be a major setback to its plans to clear waiting lists in rural areas by 2006. The number of people on the waiting list for BSNL phones in rural India is estimated at about 1.35 million.

'These one million lines were to be used in rural areas. Our target to clear the existing waiting list will have to be pushed back by a year to 2007,' a BSNL executive added.

According to BSNL sources, two possible options on the course of action against the Chinese firm are being examined -- imposing a ban on Huawei from participating in any tendering process for a period of one year, or a permanent ban on it for CDMA projects in the future.

A blanket ban for a year will imply that Huawei will not be eligible to bid for BSNL's upcoming project for setting up 60 million GSM lines. The government has recently cleared the decks for all companies, including the ones from China, to bid for the GSM project.

HuaweiGs Indian travails

* Government clearance for $60 million manufacturing unit pending for over six months
* FIPB, DoT yet to clear $100 million expansion
* Licence to bid for MTNL, BSNL tenders not issued
* Security concerns raised
brahmos 12/5/2012 | 2:55:01 AM
re: BSNL Threatens to Ban Huawei and before someone jumps in to say capitalism should prevail and everyone allowed in, will the US do business with ANY nation that supplies certified & bellcore-tested nuclear devices and missiles to Cuba!

reg_invoke_regime_change() is what you'd get instead.
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