India Telecom 2010: AlcaLu, ZTE Win at BSNL

NEW DELHI -- India Telecom 2010 -- State-owned operator Bharat Sanchar Nigam Ltd. (BSNL) looks set to award GSM network expansion deals believed to be worth US$600 million to Alcatel-Lucent (NYSE: ALU) and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) following a controversial bidding process.

BSNL has been trying to add to its GSM capacity for a number of years, but its tender processes have been mired in controversy and repeatedly abandoned. Earlier this year it announced a new tender for 5.5 million GSM lines that, initially, excluded Chinese vendors Huawei Technologies Co. Ltd. and ZTE because of ongoing national security concerns. (See BSNL Blocks Huawei, ZTE Bids.)

Eventually, though, industry security compromises were reached and the Chinese vendors were invited back into the bid process, while Ericsson AB (Nasdaq: ERIC) subsequently pulled out, citing onerous security-related requirements. (See TiVo Measures Web TV and Ericsson Holds Back on BSNL Bid.)

Now, according to well-placed industry sources, ZTE has been chosen as the provider of the mobile network core equipment, an engagement valued at around $100 million, while AlcaLu has been chosen to supply $500 million of radio access network (RAN) gear.

Why this matters
BSNL needs more GSM capacity to remain competitive, and has done for some time, so it needs to pin down these deals and get the ball rolling. But it's not as simple as that. Although India has imposed new security requirements on vendors and operators, there are still outstanding queries on these matters, and final purchase orders and deliveries look unlikely until the Indian government and the industry settle the details of the security process issues. To complicate matters, Ericsson is believed to be agitating to have the tender process restarted. (See India Set for Source Code U-Turn.)

The news will be welcomed by ZTE, as it will help further boost its revenues and standing in what has been a tough year for Chinese technology firms in India, while for AlcaLu it's a fillip following its lack of success in the recent round of 3G tenders. (See NSN, ZTE Bag 3G Deals in India and Ericsson's India Crown Under Threat.)

For more
For further background on India's mobile developments, check out these stories:

— Ray Le Maistre, International Managing Editor, Light Reading

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