Huawei May Lose to ITI in India

12:45 PM -- In the latest twist to one of the world's largest ever mobile equipment tenders, Bharat Sanchar Nigam Ltd. (BSNL) is set to award its $2 billion contract for the supply of 25 million lines to beleaguered state-run Indian telecom vendor ITI Ltd. , according to this Economic Times report.

The huge BSNL tender, estimated to be in excess of $6 billion in total for four regions, has been anything but straightforward. It's been dogged by problems and by vendors unhappy with the lack of transparency in the process.

Nokia Networks couldn't understand why its bids were ruled out on technical grounds -- after all it has delivered the odd mobile network or two in its time -- but that decision was upheld on appeal. (See NSN Probes BSNL Bid Process).

BSNL has rules that mean any one vendor can supply only two regions, and with everyone else out of the equation, Ericsson AB (Nasdaq: ERIC) was awarded the east and north regions and Huawei Technologies Co. Ltd. was in line for the south and west. It was duly awarded the south, but the west remains unassigned as the country's Foreign Ministry, Intelligence Bureau, and other security agencies all raised concerns about the Chinese vendor supplying equipment to the region that shares borders with China and Pakistan. (See Huawei Touts $2B Deal From BSNL ).

That leaves BSNL with two options: Go out to tender again or give the contract to fellow government-run company ITI.

ITI has struggled in recent years, and the government has allocated budget to help build up the company. (See $7B Target for India's 3G Auctions). In addition, the Department of Telecommunication's secretary, Shri Siddhartha Behura, visited the company's Rae Bareli Plant on August 26 and said that regaining lost glory should be the company's aim, according to ITI's own Website.

Little more than two weeks later, news breaks that ITI is getting a major share of BSNL's contract. Coincidence? Possibly, but don't expect Huawei to take this one lying down.

While Huawei is working on its response, Alcatel-Lucent (NYSE: ALU) will be smiling, as it is ITI's usual supplier of GSM equipment. According the Economic Times, ITI doesn't have the necessary GSM expertise and therefore would need support from its global partner.

— Catherine Haslam, Asia Editor, Light Reading

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